Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act.

Yes [X] No [ ]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act. Yes [ ] No [X]

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for
such shorter period that the registrant was required to submit and post such files). Yes [X] No
[ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form
10-K/A or any amendment to this Form 10-K/A. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes [ ] No [X]

State the aggregate market value of the voting and non-voting common equity held by non-affiliates
computed by reference to the price at which the common equity was last sold, or the average bid and
asked price of such common equity, as of the last business day of the registrants most recently
completed second fiscal quarter (Feb. 28, 2011): approximately $38.4 billion.

Indicate the number of shares outstanding of each of the registrants classes of common stock, as
of the latest practicable date: 535,409,098 shares of common stock, $0.01 par value, outstanding at
Nov. 1, 2011.

Documents Incorporated by Reference

Portions of Monsanto Companys definitive proxy statement, which is expected to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A in December 2011, are incorporated
herein by reference into Part III of this Annual Report on Form 10-K/A.

We are filing this Amended Annual Report on Form 10-K/A (the Amended Filing) to our Annual Report
on Form 10-K for the fiscal year ended Aug. 31, 2011, as filed with the Securities and Exchange
Commission (the SEC) on Nov. 14, 2011 (the Original Filing), to include the conformed
signatures of our independent registered public accounting firm, Deloitte & Touche LLP (D&T), on
both of its Reports of Independent Registered Public Accounting Firm, set forth on pages 48-50 in
Part II, Item 8, and its consent filed as Exhibit 23, each of the Original Filing. The signed
reports and consent were obtained by us prior to our filing of the Original Filing with the SEC,
but the conformed signatures of D&T were inadvertently omitted from the Original Filing.

No other changes are being made to the Financial Statements or any other matter in Part II, Item 8
of the Original Filing. In addition, no changes are being made to any other item of our Original
Filing other than the updating of: (i) the Exhibits to include updated Certifications of the Chief
Executive and Chief Financial Officers, and (ii) the Exhibit Index to disclose that certain
exhibits that were filed with the Original Filing are incorporated by reference into this Amended
Filing. The sections of the Original Filing that are not being amended are unchanged and continue
in full force and effect as originally filed. This Amended Filing speaks as of the date of the
Original Filing and has not been updated to reflect events occurring subsequent to the Original
Filing date.

Monsanto Companys management is responsible for the fair presentation and consistency, in
accordance with accounting principles generally accepted in the United States of America, of all
the financial information included in this Form 10-K. Where necessary, the information reflects
managements best estimates and judgments.

Management is also responsible for establishing and maintaining an effective system of internal
control over financial reporting. The purpose of this system is to provide reasonable assurance
that Monsantos assets are safeguarded against material loss from unauthorized acquisition, use or
disposition, that authorized transactions are properly recorded to permit the preparation of
accurate financial information in accordance with generally accepted accounting principles, that
records are maintained which accurately and fairly reflect the transactions and dispositions of the
company, and that receipts and expenditures are being made only in accordance with authorizations
of management and directors of the company. This system of internal control over financial
reporting is supported by formal policies and procedures, including a Business Conduct program
designed to encourage and assist employees in living up to high standards of integrity, as well as
a Code of Ethics for Chief Executive and Senior Financial Officers. Management seeks to maintain
the effectiveness of internal control over financial reporting by careful personnel selection and
training, division of responsibilities, establishment and communication of policies, and ongoing
internal reviews and audits. See Managements Annual Report on Internal Control over Financial
Reporting for Managements conclusion of the effectiveness of Monsantos internal control over
financial reporting as of Aug. 31, 2011.

Monsantos consolidated financial statements have been audited by Deloitte & Touche LLP,
independent registered public accounting firm. Their audits were conducted in accordance with the
standards of the Public Company Accounting Oversight Board (United States), and included a test of
financial controls, tests of accounting records, and such other procedures as they considered
necessary in the circumstances.

The Audit and Finance Committee, composed entirely of outside directors, meets regularly with
management, with the internal auditors and with the independent registered public accounting firm
to review accounting, financial reporting, auditing and internal control matters. The committee has
direct and private access to the registered public accounting firm and internal auditors.

Managements Annual Report on Internal Control over Financial Reporting

Management of Monsanto Company is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange
Act. Under the supervision and with the participation of our management, including the Chief
Executive Officer and the Chief Financial Officer, we conducted an evaluation of the effectiveness
of our internal control over financial reporting based on the framework and criteria established in
Internal Control  Integrated Framework, issued by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO). This evaluation identified the below material weakness in the
companys internal control over financial reporting which is further discussed in Item 9A of this
Annual Report.

The controls over the timing of the recording of customer incentives were improperly designed and
were not effective in capturing the accuracy and timeliness of incentives communicated to
customers. The controls that had been in place focused primarily on the review of contracts,
including incentive programs with customers, the appropriate accounting for such programs and
approval of payments to customers. The controls were not effective in recording incentives in the
appropriate period based on communications between the sales organization and the customer.

Based on our evaluation under the COSO framework, management concluded that the companys internal
control over financial reporting was not effective as of Aug. 31, 2011.

The companys independent registered public accounting firm, Deloitte & Touche LLP, was appointed
by the Audit and Finance Committee of the companys Board of Directors, and ratified by the
companys shareowners. Deloitte & Touche LLP has audited and reported on the Consolidated Financial
Statements of Monsanto Company and subsidiaries and the effectiveness of the companys internal
control over financial reporting. The reports of the independent registered public accounting firm
are contained in Item 8 of this Annual Report.

We have audited the internal control over financial reporting of Monsanto Company and subsidiaries
(the Company) as of August 31, 2011, based on criteria established in Internal Control 
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. As described in Managements Annual Report on Internal Control over Financial
Reporting, the Companys management is responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal control over financial
reporting, included in the accompanying Managements Annual Report on Internal Control over
Financial Reporting. Our responsibility is to express an opinion on the Companys internal control
over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk,
and performing such other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.

A companys internal control over financial reporting is a process designed by, or under the
supervision of, the companys principal executive and principal financial officers, or persons
performing similar functions, and effected by the companys board of directors, management, and
other personnel to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A companys internal control over financial reporting includes
those policies and procedures that (1) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
companys assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the
possibility of collusion or improper management override of controls, material misstatements due to
error or fraud may not be prevented or detected on a timely basis. Also, projections of any
evaluation of the effectiveness of the internal control over financial reporting to future periods
are subject to the risk that the controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over
financial reporting, such that there is a reasonable possibility that a material misstatement of
the companys annual or interim financial statements will not be prevented or detected on a timely
basis. The following material weakness has been identified and included in managements assessment:
The controls over the timing of the recording of customer incentives were improperly designed and
were not effective in capturing the accuracy and timeliness of incentives communicated to
customers. The controls that had been in place focused primarily on the review of contracts,
including incentive programs, with customers, the appropriate accounting for such programs and
approval of payments to customers. The controls were not effective in recording incentives in the
appropriate period based on communications between the sales organization and the customer. This
material weakness was considered in determining the nature, timing and extent of audit tests
applied in our audit of the consolidated financial statements as of and for the year ended August
31, 2011 of the Company and this report does not affect our report on such financial statements.

In our opinion, because of the effect of the material weakness identified above on the achievement
of the objectives of the control criteria, the Company has not maintained effective internal
control over financial reporting as of August 31, 2011, based on the criteria established in
Internal Control  Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the statement of consolidated financial position as of August 31, 2011 and
the related statements of consolidated operations, cash flows, and shareowners equity and
comprehensive income for the year ended August 31, 2011, of the Company and our report dated
November 14, 2011 expressed an unqualified opinion and includes explanatory paragraphs regarding
the

Companys adoption of new accounting guidance for variable interest entities effective September 1,
2010 applied prospectively and the Companys retrospective adoption of new accounting guidance
related to noncontrolling interest and the computation of earnings per share.

We have audited the accompanying statements of consolidated financial position of Monsanto Company
and subsidiaries (the Company) as of August 31, 2011 and 2010, and the related statements of
consolidated operations, cash flows and shareowners equity and comprehensive income for each of
the three years in the period ended August 31, 2011. These financial statements are the
responsibility of the Companys management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects,
the financial position of Monsanto Company and subsidiaries as of August 31, 2011 and 2010, and the
results of their operations and their cash flows for each of the three years in the period ended
August 31, 2011, in conformity with accounting principles generally accepted in the United States
of America.

As discussed in Note 2 and Note 3 to the consolidated financial statements, the Company
prospectively adopted new accounting guidance related to variable interest entities effective
September 1, 2010. As discussed in Note 3 and 24 to the consolidated financial statements, the
accompanying 2009 financial statements have been retrospectively adjusted for new accounting
guidance related to noncontrolling interest and the computation of earnings per share.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the Companys internal control over financial reporting as of August 31,
2011, based on the criteria established in Internal ControlIntegrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission and our report dated November 14,
2011 expressed an adverse opinion on the Companys internal control over financial reporting
because of a material weakness.

Monsanto Company, along with its subsidiaries, is a leading global provider of agricultural
products for farmers. Monsantos seeds, biotechnology trait products, and herbicides provide
farmers with solutions that improve productivity, reduce the costs of farming, and produce better
foods for consumers and better feed for animals.

Monsanto manages its business in two segments: Seeds and Genomics and Agricultural Productivity.
Through the Seeds and Genomics segment, Monsanto produces leading seed brands, including DEKALB,
Asgrow, Deltapine, Seminis and De Ruiter, and Monsanto develops biotechnology traits that assist
farmers in controlling insects and weeds. Monsanto also provides other seed companies with genetic
material and biotechnology traits for their seed brands. Through the Agricultural Productivity
segment, the company manufactures Roundup and Harness brand herbicides and other herbicides. See
Note 27  Segment and Geographic Data  for further details.

In the fourth quarter of 2008, the company announced plans to divest its animal agricultural
products business, which focused on dairy cow productivity (the Dairy business). This transaction
was consummated on Oct. 1, 2008. As a result, financial data for this business has been presented
as discontinued operations. The financial statements have been prepared in compliance with the
provisions of the Property, Plant and Equipment topic of the Financial Accounting Standards Board
(FASB) Accounting Standards Codification (ASC). Accordingly, for all periods presented herein, the
Statements of Consolidated Operations and Consolidated Financial Position have been conformed to
this presentation. The Dairy business was previously reported as part of the Agricultural
Productivity segment. See Note 29  Discontinued Operations  for further details.

Monsanto includes the operations, assets and liabilities that were previously the agricultural
business of Pharmacia Corporation (Pharmacia), which is now a subsidiary of Pfizer Inc. Monsanto
was incorporated as a subsidiary of Pharmacia in February 2000. On Sept. 1, 2000, the assets and
liabilities of the agricultural business were transferred from Pharmacia to Monsanto, pursuant to
the terms of a separation agreement dated as of that date (the Separation Agreement), from which
time the consolidated financial statements reflect the results of operations, financial position,
and cash flows of the company as a separate entity responsible for procuring or providing the
services and financing previously provided by Pharmacia. In October 2000, Monsanto sold
approximately 15 percent of its common stock at $10 per share in an initial public offering. On
Aug. 13, 2002, Pharmacia completed a spinoff of Monsanto by distributing its entire ownership
interest via a tax-free dividend to Pharmacias shareowners.

Unless otherwise indicated, Monsanto and the company are used interchangeably to refer to
Monsanto Company or to Monsanto Company and its consolidated subsidiaries, as appropriate to the
context.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation

The accompanying consolidated financial statements of Monsanto and its subsidiaries were prepared
in accordance with generally accepted accounting principles in the United States of America
(GAAP) and include the assets, liabilities, revenues and expenses of all majority-owned
subsidiaries over which the Company exercises control and, when applicable, entities for which the
Company has a controlling financial interest or is the primary beneficiary. Intercompany accounts
and transactions have been eliminated in consolidation. The company records income attributable to
noncontrolling interest in the Statements of Consolidated Operations for any non-owned portion of
consolidated subsidiaries. Noncontrolling interest is recorded within the equity section but
separate from Monsantos equity in the Statements of Consolidated Financial Position.

On September 1, 2010, Monsanto prospectively adopted the accounting standard update regarding
improvements to financial reporting by enterprises involving variable interest entities (VIEs).
This accounting standard codification (ASC) requires former qualifying Special Purpose Entities
(SPE) to be evaluated for consolidation and also changed the approach to determining a VIEs primary
beneficiary and requires companies to more frequently reassess whether they must consolidate VIEs.
Arrangements with business enterprises are evaluated, and those in which Monsanto is determined to
be the primary

beneficiary are consolidated. See Note 8  Variable Interest Entities  for a
description of consolidated and non-consolidated VIEs.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted
in the United States requires management to make certain estimates and assumptions that affect the
amounts reported in the consolidated financial statements and accompanying notes. Estimates are
adjusted to reflect actual experience when necessary. Significant estimates and assumptions affect
many items in the financial statements. These include allowance for doubtful trade receivables,
sales returns and allowances, inventory obsolescence, income tax liabilities and assets and related
valuation allowances, asset impairments, valuations of goodwill and other intangible assets,
employee benefit plan liabilities, value of equity-based awards, marketing program liabilities,
grower accruals (an estimate of amounts payable to farmers who grow seed for Monsanto),
restructuring reserves, self-insurance reserves, environmental reserves, deferred revenue,
contingencies, litigation, incentives, and the allocation of corporate costs to segments.
Significant estimates and assumptions are also used to establish the fair value and useful lives of
depreciable tangible and certain intangible assets. Actual results may differ from those estimates
and assumptions, and such results may affect income, financial position, or cash flows.

Revenue Recognition

The company derives most of its revenue from three main sources: sales of branded conventional seed
and branded seed with biotechnology traits; royalties and license revenues from licensed
biotechnology traits and genetic material; and sales of agricultural chemical products.

Revenues from all branded seed sales are recognized when the title to the products is transferred.
When the right of return exists in the companys seed business, sales revenues are reduced at the
time of sale to reflect expected returns. In order to estimate the expected returns, management
analyzes historical returns, economic trends, market conditions, and changes in customer demand.

Revenues for agricultural chemical products are recognized when title to the products is
transferred. The company recognizes revenue on products it sells to distributors when, according to
the terms of the sales agreements, delivery has occurred, performance is complete, no right of
return exists, and pricing is fixed or determinable at the time of sale.

There are several additional conditions for recognition of revenue including that the collection of
sales proceeds must be reasonably assured based on historical experience and current market
conditions and that there must be no further performance obligations under the sale or the royalty
or license agreement.

Monsanto follows the Revenue Recognition topic of the ASC. The Revenue Recognition topic of the ASC
affects Monsantos recognition of license revenues from biotechnology traits sold through
third-party seed companies. Trait royalties and license revenues are recorded when earned, usually
when the third-party seed companies sell their seeds containing Monsanto traits to growers.

To reduce credit exposure in Latin America, Monsanto collects payments on certain customer accounts
in grain. Monsanto does not take physical custody of the grain or assume the associated inventory
risk and therefore does not record revenue or the related cost of sales for the grain. Such
payments in grain are negotiated at or near the time Monsantos products are sold to the customers
and are valued at the prevailing grain commodity prices. By entering into forward sales contracts
with grain merchants, Monsanto mitigates the commodity price exposure from the time a contract is
signed with a customer until the time a grain merchant collects the grain from the customer on
Monsantos behalf. The grain merchant converts the grain to cash for Monsanto. These forward sales
contracts do not qualify for hedge accounting under the Derivatives and Hedging topic of the ASC.
Accordingly, the gain or loss on these derivatives is recognized in current earnings.

Promotional and advertising costs are expensed as incurred and are included in selling, general and
administrative expenses in the Statements of Consolidated Operations. Marketing program costs are
recorded in accordance with the Revenue Recognition topic of the ASC, based on specific performance
criteria met by our customers, such as purchase volumes, promptness of payment, and market share
increases. The cost of marketing programs is recorded in net sales in the Statements of
Consolidated Operations. As actual marketing program expenses are not known at the time of the
sale, an

estimate based on the best available information (such as historical experience and market
research) is used as a basis for recording marketing program liabilities. Management analyzes and
reviews the marketing program balances on a quarterly basis and adjustments are recorded as
appropriate. In fiscal years 2010 and 2009, the company executed marketing programs that provided
certain customers price protection consideration if standard purchase prices fall lower than the
price the distributor paid on eligible products. Accordingly, the company evaluated the impacts of
these programs on revenue recognition, and recorded revenue when all revenue recognition criteria
were met. Under certain marketing programs, product performance and variations in weather can
result in free product to customers. The associated cost of this free product is recognized as cost
of goods sold in the Statements of Consolidated Operations.

Research and Development Costs

The company accounts for research and development (R&D) costs in accordance with the Research and
Development topic of the ASC. Under the Research and Development topic of the ASC, all R&D costs
must be charged to expense as incurred. Accordingly, internal R&D costs are expensed as incurred.
Third-party R&D costs are expensed when the contracted work has been performed or as milestone
results are achieved. For acquisitions that occurred in 2009 and 2008, in-process R&D (IPR&D) costs
with no alternative future uses are expensed in the period acquired. As a result of adopting the
provisions of a new accounting standard related to business combinations issued by the FASB, for
acquisitions completed after Sept. 1, 2009, acquired IPR&D costs without alternative uses will be
recorded on the Statements of Consolidated Financial Position as indefinite-lived intangible
assets. The costs of purchased IPR&D that have alternative future uses are capitalized and
amortized over the estimated useful life of the asset. The costs associated with equipment or
facilities acquired or constructed for R&D activities that have alternative future uses are
capitalized and depreciated on a straight-line basis over the estimated useful life of the asset.
The amortization and depreciation for such capitalized assets are charged to R&D expenses. In
fiscal year 2007, Monsanto and BASF announced a long-term joint R&D and commercialization
collaboration in plant technology that will focus on high-yielding crops and crops that are
tolerant to adverse conditions. The collaboration resulted in shared R&D costs. Only Monsantos
portion has been included in research and development expenses in the Statements of Consolidated
Operations.

Income Taxes

Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary
differences between the tax bases of assets and liabilities and their reported amounts. Management
regularly assesses the likelihood that deferred tax assets will be recovered from future taxable
income, and to the extent management believes that it is more likely than not that a deferred tax
asset will not be realized, a valuation allowance is established. When a valuation allowance is
established, increased or decreased, an income tax charge or benefit is included in the
consolidated financial statements and net deferred tax assets are adjusted accordingly. The net
deferred tax assets as of Aug. 31, 2011, represent the estimated future tax benefits to be received
from taxing authorities or future reductions of taxes payable.

On Sept. 1, 2007, Monsanto adopted the updated provisions of the Income Taxes topic of the ASC.
Under this topic of the ASC, in order to recognize an uncertain tax benefit, the taxpayer must be
more likely than not of sustaining the position, and the measurement of the benefit is calculated
as the largest amount that is more than 50 percent likely to be realized upon resolution of the
benefit. Tax authorities regularly examine the companys returns in the jurisdictions in which
Monsanto does business. Management regularly assesses the tax risk of the companys return filing
positions and believes its accruals for uncertain tax benefits are adequate as of Aug. 31, 2011,
and Aug. 31, 2010.

Cash and Cash Equivalents

All highly liquid investments (defined as investments with a maturity of three months or less when
purchased) are considered cash equivalents.

Inventory Valuation and Obsolescence

Inventories are stated at the lower of cost or market, and an inventory reserve would permanently
reduce the cost basis of inventory. Inventories are valued as follows:

Seeds and Genomics: Actual cost is used to value raw materials such as treatment
chemicals and packaging, as well as goods in process. Costs for substantially all
finished goods, which include the cost of carryover crops from the previous year, are
valued at weighted-average actual cost. Weighted-average actual cost includes field
growing and harvesting costs, plant conditioning and packaging costs, and manufacturing
overhead costs.

Agricultural Productivity: Actual cost is used to value raw materials and supplies. Standard
cost, which approximates actual cost, is used to value finished goods and goods in
process. Variances, exclusive of abnormally low volume and operating performance, are
capitalized into inventory. Standard cost includes direct labor and raw materials, and
manufacturing overhead based on normal capacity. The cost of the Agricultural
Productivity segment inventories in the United States (approximately 10 percent as of
Aug. 31, 2011 and 14 percent as of Aug. 31, 2010) is determined by using the last-in,
first-out (LIFO) method, which generally reflects the effects of inflation or deflation
on cost of goods sold sooner than other inventory cost methods. The cost of inventories
outside of the United States, as well as supplies inventories in the United States, is
determined by using the first-in, first-out (FIFO) method; FIFO is used outside of the
United States because the requirements in the countries where Monsanto maintains
inventories generally do not allow the use of the LIFO method. Inventories at FIFO
approximate current cost.

In accordance with the Inventory topic of the ASC, Monsanto records abnormal amounts of idle
facility expense, freight, handling costs and wasted material (spoilage) as current period charges
and allocates fixed production overhead to the costs of conversion based on the normal capacity of
the production facilities.

Monsanto establishes allowances for obsolescence of inventory equal to the difference between the
higher of cost of inventory and the estimated market value, based on assumptions about future
demand and market conditions. The company regularly evaluates the adequacy of our inventory
obsolescence reserves. If economic and market conditions are different from those anticipated,
inventory obsolescence could be materially different from the amounts provided for in the companys
consolidated financial statements. If inventory obsolescence is higher than expected, cost of goods
sold will be increased, and inventory, net income, and shareowners equity will be reduced.

Goodwill

Monsanto follows the guidance of the Business Combinations topic of the ASC, in recording the
goodwill arising from a business combination as the excess of purchase price and related costs over
the fair value of identifiable assets acquired and liabilities assumed.

Under the Intangibles  Goodwill and Other topic of the ASC, goodwill is not amortized and is
subject to annual impairment tests. A fair-value-based test is applied at the reporting unit level,
which is generally at or one level below the operating segment level. The test compares the fair
value of the companys reporting units to the carrying value of those reporting units. This test
requires various judgments and estimates. The fair value of goodwill is determined using an
estimate of future cash flows of the reporting unit and a risk-adjusted discount rate to compute a
net present value of future cash flows. An adjustment to goodwill will be recorded for any goodwill
that is determined to be impaired. Impairment of goodwill is measured as the excess of the carrying
amount of goodwill over the fair values of recognized and unrecognized assets and liabilities of
the reporting unit. Goodwill is tested for impairment at least annually, or more frequently if
events or circumstances indicate it might be impaired. Goodwill was last tested for impairment as
of March 1, 2011. See Note 11  Goodwill and Other Intangible Assets  for further discussion of
the annual impairment test.

Other Intangible Assets

Other intangible assets consist primarily of acquired seed germplasm, acquired intellectual
property, trademarks and customer relationships. Seed germplasm is the genetic material used in new
seed varieties. Germplasm is amortized on a straight-line basis over useful lives ranging from five
years for completed technology germplasm to a maximum of 30 years for certain core technology
germplasm. Completed technology germplasm consists of seed hybrids and varieties that are
commercially available. Core technology germplasm is the collective germplasm of inbred and hybrid
seeds and has a longer useful life as it is used to develop new seed hybrids and varieties.
Acquired intellectual property includes intangible assets related to acquisitions and licenses through which Monsanto has acquired the rights to various
research and discovery technologies. These encompass intangible assets such as enabling processes
and data libraries necessary to support the integrated genomics and biotechnology platforms. These
intangible assets have alternative future uses and are amortized over useful lives ranging from
three to 10 years. The useful lives of acquired germplasm and acquired intellectual property are
determined based on consideration of several factors including the nature of the asset, its
expected use, length of licensing agreement or patent and the period over which benefits are
expected to be received from the use of the asset.

our insect-protection traits,
formulations used to make our herbicides and various manufacturing processes. The amortization
period for trademarks and patents ranges from one to 30 years. Trademarks are amortized on a
straight-line basis over their useful lives. The useful life of a trademark is determined based on
the estimated market-life of the associated company, brand or product. Patents are amortized on a
straight-line basis over the period in which the patent is legally protected, the period over which
benefits are expected to be received, or the estimated market-life of the product with which the
patent is associated, whichever is shorter.

In conjunction with acquisitions, Monsanto obtains access to the distribution channels and customer
relationships of the acquired companies. These relationships are expected to provide economic
benefits to Monsanto. The amortization period for customer relationships ranges from three to 20
years, and amortization is recognized on a straight-line basis over these periods. The amortization
period of customer relationships represents managements best estimate of the expected usage or
consumption of the economic benefits of the acquired assets, which is based on the companys
historical experience of customer attrition rates.

In accordance with the Intangibles  Goodwill and Other topic of the ASC, all amortizable
intangible assets are assessed for impairment whenever events indicate a possible loss. Such an
assessment involves estimating undiscounted cash flows over the remaining useful life of the
intangible. If the review indicates that undiscounted cash flows are less than the recorded value
of the intangible asset, the carrying amount of the intangible is reduced by the estimated
cash-flow shortfall on a discounted basis, and a corresponding loss is charged to the Statement of
Consolidated Operations. See Note 11  Goodwill and Other Intangible Assets  for further
discussion of Monsantos intangible assets.

Property, Plant and Equipment

Property, plant and equipment is recorded at cost. Additions and improvements are capitalized;
these include all material, labor, and engineering costs to design, install or improve the asset
and interest costs on construction projects. Such costs are not depreciated until the assets are
placed in service. Routine repairs and maintenance are expensed as incurred. The cost of plant and
equipment is depreciated using the straight-line method over the estimated useful life of the asset
 weighted-average periods of approximately 25 years for buildings, 10 years for machinery and
equipment and seven years for software. In compliance with the Property, Plant and Equipment topic
of the ASC, long-lived assets are reviewed for impairment whenever in managements judgment
conditions indicate a possible loss. Such impairment tests compare estimated undiscounted cash
flows to the recorded value of the asset. If an impairment is indicated, the asset is written down
to its fair value or, if fair value is not readily determinable, to an estimated fair value based
on discounted cash flows. Based on recent changes in the Roundup business, Monsanto performed an
impairment test on the long-lived assets in the Roundup and other glyphosate-based products
reporting units asset group. The test indicated no impairment during fiscal year 2010. There were
no indications that an impairment test was needed in fiscal year 2011.

Monsanto follows the Asset Retirement and Environmental Obligations topic of the ASC, which
addresses financial accounting for and reporting of costs and obligations associated with the
retirement of tangible long-lived assets. Monsanto has asset retirement obligations with carrying
amounts totaling $71 million and $65 million as of Aug. 31, 2011, and Aug. 31, 2010, respectively,
primarily relating to its manufacturing facilities. The change in carrying value as of Aug. 31,
2011, consisted of $4 million for accretion expense offset by $2 million in increased costs.

Environmental Remediation Liabilities

Monsanto follows the Asset Retirement and Environmental Obligations topic of the ASC, which
provides guidance for recognizing, measuring and disclosing environmental remediation liabilities.
Monsanto accrues these costs in the period when responsibility is established and when such costs
are probable and reasonably estimable based on current law and
existing technology. Postclosure and remediation costs for hazardous waste sites and other waste
facilities at operating locations are accrued over the estimated life of the facility, as part of
its anticipated closure cost.

Litigation and Other Contingencies

Monsanto is involved in various intellectual property, biotechnology, tort, contract, antitrust,
shareowner claims, environmental and other litigation, claims and legal proceedings; environmental
remediation; and government investigations (see Note 26  Commitments and Contingencies).
Management routinely assesses the likelihood of adverse judgments or outcomes to those matters, as
well as ranges of probable losses, to the extent losses are reasonably estimable. In accordance
with the Contingencies topic of the ASC, accruals for such contingencies are recorded to the extent
that management

concludes their occurrence is probable and the financial impact, should an adverse
outcome occur, is reasonably estimable. Disclosure for specific legal contingencies is provided if
the likelihood of occurrence is at least reasonably possible and the exposure is considered
material to the consolidated financial statements. In making determinations of likely outcomes of
litigation matters, management considers many factors. These factors include, but are not limited
to, past experience, scientific and other evidence, interpretation of relevant laws or regulations
and the specifics and status of each matter. If the assessment of the various factors changes, the
estimates may change. That may result in the recording of an accrual or a change in a previously
recorded accrual. Predicting the outcome of claims and litigation and estimating related costs and
exposure involves substantial uncertainties that could cause actual costs to vary materially from
estimates and accruals.

Guarantees

Monsanto is subject to various commitments under contractual and other commercial obligations. The
company recognizes liabilities for contingencies and commitments under the Guarantees topic of the
ASC. For additional information on the companys commitments and other contractual and commercial
obligations, see Note 26  Commitments and Contingencies.

Foreign Currency Translation

The financial statements for most of Monsantos ex-U.S. operations are translated to U.S. dollars
at current exchange rates. For assets and liabilities, the fiscal year-end rate is used. For
revenues, expenses, gains and losses, an approximation of the average rate for the period is used.
Unrealized currency adjustments in the Statements of Consolidated Financial Position are
accumulated in equity as a component of accumulated other comprehensive loss. The financial
statements of ex-U.S. operations in highly inflationary economies are translated at either current
or historical exchange rates at the time they are deemed highly inflationary, in accordance with
the Foreign Currency Matters topic of the ASC. These currency adjustments are included in net
income. Based on the Consumer Price Index (CPI), Monsanto designated Venezuela as a
hyperinflationary country effective June 1, 2009.

Significant translation exposures include the Brazilian real, the European euro, the Mexican peso,
the Canadian dollar, the Australian dollar, and the Romanian leu. Currency restrictions are not
expected to have a significant effect on Monsantos cash flow, liquidity, or capital resources.

Derivatives and Other Financial Instruments

Monsanto uses financial derivative instruments to limit its exposure to changes in foreign currency
exchange rates, commodity prices, and interest rates. Monsanto does not use financial derivative
instruments for the purpose of speculating in foreign currencies, commodities or interest rates.
Monsanto continually monitors its underlying market risk exposures and believes that it can modify
or adapt its hedging strategies as needed.

In accordance with the Derivatives and Hedging topic of the ASC, all derivatives, whether
designated for hedging relationships or not, are recognized in the Statements of Consolidated
Financial Position at their fair value. At the time a derivative contract is entered into, Monsanto
designates each derivative as: (1) a hedge of the fair value of a recognized asset or liability (a
fair-value hedge), (2) a hedge of a forecasted transaction or of the variability of cash flows that
are to be received or paid in connection with a recognized asset or liability (a cash-flow hedge),
(3) a foreign-currency fair-value or cash-flow hedge (a foreign-currency hedge), (4) a
foreign-currency hedge of the net investment in a foreign subsidiary, or (5) a derivative that does
not qualify for hedge accounting treatment.

Changes in the fair value of a derivative that is highly effective, and that is designated as and
qualifies as a fair-value hedge, along with changes in the fair value of the hedged asset or
liability that are attributable to the hedged risk, are recorded
currently in net income. Changes in the fair value of a derivative that is highly effective, and
that is designated as and qualifies as a cash-flow hedge, to the extent that the hedge is
effective, are recorded in accumulated other comprehensive loss, until net income is affected by
the variability from cash flows of the hedged item. Any hedge ineffectiveness is included in
current-period net income. Changes in the fair value of a derivative that is highly effective, and
that is designated as and qualifies as a foreign-currency hedge, are recorded either in
current-period earnings or in accumulated other comprehensive loss, depending on whether the
hedging relationship satisfies the criteria for a fair-value or cash-flow hedge. Changes in the
fair value of a derivative that is highly effective, and that is designated as a foreign-currency
hedge of the net investment in a foreign subsidiary, are recorded in the accumulated foreign
currency translation. Changes in the fair value of derivative instruments not designated as hedges
are reported currently in earnings.

Monsanto formally and contemporaneously documents all relationships between hedging instruments and
hedged items, as well as its risk-management objective and its strategy for undertaking various
hedge transactions. This includes linking all derivatives that are designated as fair-value,
cash-flow, or foreign-currency hedges either to specific assets and liabilities on the Statements
of Consolidated Financial Position, or to firm commitments or forecasted transactions. Monsanto
formally assesses a hedge at its inception and on an ongoing basis thereafter to determine whether
the hedging relationship between the derivative and the hedged item is still highly effective, and
whether it is expected to remain highly effective in future periods, in offsetting changes in fair
value or cash flows. When derivatives cease to be highly effective hedges, Monsanto discontinues
hedge accounting prospectively.

NOTE 3. NEW ACCOUNTING STANDARDS

In September 2011, the FASB issued an amendment to the Intangibles-Goodwill and Other topic of the
ASC. Prior to this amendment the company performs a two-step test as outlined by the ASC. Step one
of the two-step impairment test is performed by calculating the fair value of the reporting unit
and comparing the fair value with the carrying amount of the reporting unit. If the carrying amount
of a reporting unit exceeds its fair value, then the company is required to perform the second step
of the goodwill impairment test to measure the amount of the impairment loss, if any. Under this
amendment, an entity has the option to first assess qualitative factors to determine whether it is
necessary to perform the current two-step test. If an entity believes, as a result of its
qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is
less than its carrying amount, the quantitative impairment test is required. Otherwise, no further
testing is required. An entity can choose to perform the qualitative assessment on none, some or
all of its reporting units. Moreover, an entity can bypass the qualitative assessment for any
reporting unit in any period and proceed directly to step one of the impairment test, and then
resume performing the qualitative assessment in any subsequent period. The amendment is effective
for annual and interim goodwill impairment tests performed for fiscal years beginning after Dec.
15, 2011. Accordingly, Monsanto will adopt this amendment in fiscal year 2013. The company is
currently evaluating the impact of adoption on the consolidated financial statements.

In June 2011, the FASB issued an amendment to the Comprehensive Income topic of the ASC. This
amendment eliminates the option to present the components of other comprehensive income as part of
the statement of changes in shareowners equity. In addition, items of other comprehensive income
that may be reclassified to profit or loss in the future are required to be presented separately
from those that would never be reclassified. The amendment is effective for fiscal years beginning
after Dec. 15, 2011, and interim periods within that year. Accordingly, Monsanto will adopt this
amendment in first quarter fiscal year 2013. The company is currently evaluating the impact of
adoption on the consolidated financial statements.

In May 2011, the FASB issued a new accounting standard update, which amends the fair value
measurement guidance and includes some enhanced disclosure requirements. The most significant
change in disclosures is an expansion of the information required for Level 3 measurements based on
unobservable inputs. The amendment is effective for interim and annual periods beginning after Dec.
15, 2011. Accordingly, Monsanto will adopt this amendment in third quarter of fiscal year 2012. The
company is currently evaluating the impact of adoption on the consolidated financial statements.

In June 2009, the FASB issued a standard that requires an analysis to determine whether a variable
interest gives the entity a controlling financial interest in a variable interest entity. This
statement requires an ongoing reassessment and eliminates the quantitative approach previously
required for determining whether an entity is the primary beneficiary. This standard is
effective for fiscal years beginning after Nov. 15, 2009. Accordingly, Monsanto adopted this
standard on a prospective basis in fiscal year 2011.

In June 2009, the FASB issued a standard that removes the concept of a qualifying special-purpose
entity (QSPE) from GAAP and removes the exception from applying consolidation principles to a QSPE.
This standard also clarifies the requirements for isolation and limitations on portions of
financial assets that are eligible for sale accounting. This standard is effective for fiscal years
beginning after Nov. 15, 2009. Accordingly, Monsanto adopted this standard in fiscal year 2011.

In December 2007, the FASB issued a standard that requires an entity to clearly identify and
present its ownership interests in subsidiaries held by parties other than the entity in the
consolidated financial statements within the equity section but separate

from the entitys equity.
It also requires the amount of consolidated net income attributable to the parent and to the
noncontrolling interest be clearly identified and presented on the face of the Statements of
Consolidated Operations; changes in ownership interest be accounted for similarly, as equity
transactions; and when a subsidiary is deconsolidated, any retained noncontrolling equity
investment in the former subsidiary and the gain or loss on the deconsolidation of the subsidiary
be measured at fair value. This statement is effective for financial statements issued for fiscal
years beginning after Dec. 15, 2008. The provisions of the standard related to accounting for
changes in ownership are to be applied prospectively, except for the presentation and disclosure
requirements, which are to be applied retrospectively. Monsanto adopted this standard on Sept. 1,
2009, and the presentation and disclosure requirements of this standard were applied
retrospectively to all periods presented. The adoption of this standard did not have a material
impact on the consolidated financial statements, other than the following changes in presentation
of noncontrolling interests:



Consolidated net income was recast to include net income attributable to both the
company and noncontrolling interests in the Statements of Consolidated Operations.



Noncontrolling interests were reclassified from other liabilities to equity, separate
from the parents shareowners equity, in the Statements of Consolidated Financial
Position.



The Statements of Consolidated Cash Flows now begin with net income (including
noncontrolling interests) instead of net income attributable to Monsanto Company, with net
income from noncontrolling interests (previously, minority interests) no longer a
reconciling item in arriving at net cash provided by operating activities, and the
Statements of Consolidated Cash Flows were recast to include dividend payments to
noncontrolling interests.



Statements of Consolidated Shareowners Equity and Comprehensive Income have been
combined and were recast to include noncontrolling interests.

NOTE 4. BUSINESS COMBINATIONS

Effective Sept. 1, 2009, Monsanto adopted the new guidance in the Business Combinations topic of
the ASC for acquisitions subsequent to that date.

2011 Acquisitions: In February 2011, Monsanto acquired 100 percent of the outstanding stock of
Divergence, Inc., a biotechnology research and development company located in St. Louis, Missouri.
Acquisition costs were less than $1 million and were classified as selling, general, and
administrative expenses. The total cash paid and the fair value of the acquisition was $71 million
(net of cash acquired), and the purchase price was primarily allocated to intangibles and goodwill.
The primary items that generated the goodwill were the premiums paid by the company for the right
to control the business acquired and the value of the acquired assembled workforce. The goodwill is
not deductible for tax purposes.

In December 2010, Monsanto acquired 100 percent of the outstanding stock of Pannon Seeds, a seed
processing plant located in Hungary, from IKR Production Development and Commercial Corporation.
The acquisition of this plant, which qualifies as a business under the Business Combinations topic
of the ASC, allows Monsanto to reduce third party seed production in Hungary. Acquisition costs
were less than $1 million and were classified as selling, general, and administrative expenses. The
total fair value of the acquisition was $32 million, and the purchase price was primarily allocated
to fixed assets and goodwill. This fair value includes $28 million of cash paid (net of cash
acquired) and $4 million related to assumed liabilities. The primary items that generated the goodwill were the premiums paid by the company for the right
to control the business acquired and the value of the acquired assembled workforce. The goodwill is
not deductible for tax purposes.

For the fiscal year 2011 acquisitions described above, the business operations and employees of the
acquired entities were included in the Seeds and Genomics segment results upon acquisition. These
acquisitions were accounted for as business combinations. Accordingly, the assets and liabilities
of the acquired entities were recorded at their estimated fair values at the dates of the
acquisitions. The measurement period for purchase price allocations ends as soon as information on
the facts and circumstances becomes available, but does not exceed 12 months. If new information is
obtained about facts and

circumstances that existed as of the acquisition date that, if known, would have affected the
measurement of the amounts recognized for assets acquired and liabilities assumed, Monsanto will
retrospectively adjust the amounts recognized as of the acquisition date. The preliminary purchase
price allocations are summarized in the following table:

Aggregate

(Dollars in millions)

Acquisitions

Current Assets

$

4

Property, Plant and Equipment

13

Goodwill

51

Other Intangible Assets

5

Acquired In-process Research and Development

45

Other Assets

9

Total Assets Acquired

127

Current Liabilities

2

Other Liabilities

21

Total Liabilities Assumed

23

Net Assets Acquired

$

104

Supplemental Information:

Net assets acquired

$

104

Cash acquired

5

Cash paid, net of cash acquired

$

99

Proforma information related to acquisitions is not presented because the impact of the
acquisitions on the companys consolidated results of operations is not considered to be
significant.

The excess earnings method under the income approach valuation method was used to determine the
fair value of the research project included within the IPR&D acquired. In developing assumptions
for the valuation model, Monsanto used projected revenues likely to be generated upon completion of
the project and expected pricing, margins and expense levels. The revenue and expense assumptions
also considered that the product will be successful and that the products development and
commercialization meet managements current time schedule. Managements current time schedule
includes expected product launches associated with the IPR&D within the next ten years. The
significant assumptions used to determine the fair value of the IPR&D related to the Divergence
acquisition were as follows:

(Dollars in millions)

Weighted Average Discount Rate

21

%

Expected Costs to Complete (undiscounted)

$

100

The following table presents details of the acquired identifiable intangible assets:

Weighted-

Average

Life

Useful Life

Aggregate

(Dollars in millions)

(Years)

(Years)

Acquisitions

Acquired Intellectual Property

17

17

$

5

Other Intangible Assets

$

5

2010 Acquisitions: In April 2010, Monsanto acquired a corn and soybean processing plant
located in Paine, Chile, from Anasac, a Santiago-based company that provides seed processing
services. The acquisition of this plant, which qualifies as a business under the Business
Combinations topic of the ASC, allows Monsanto to reduce tolling in Chile, while increasing
production supply. Acquisition costs were less than $1 million and classified as selling, general,
and administrative expenses. The total cash paid and the fair value of the acquisition was $34
million, and the purchase price was primarily allocated to fixed assets, goodwill and intangibles.
The primary items that generated goodwill were the premiums paid by the company for the right to
control the business acquired and the value of the acquired assembled workforce. The goodwill is
not deductible for tax purposes.

In October 2009, Monsanto acquired the remaining 51 percent equity interest in Seminium, S.A.
(Seminium), a leading Argentinean corn seed company. Acquisition costs were less than $1 million
and classified as selling, general and administrative expenses. The total fair value of Seminium
was $36 million, and it was primarily allocated to inventory, fixed assets, intangibles, and
goodwill. This fair value includes $20 million of cash paid (net of cash acquired) and $16 million
for the fair value of Monsantos 49 percent equity interest in Seminium held prior to the
acquisition. The primary items that generated goodwill were the premiums paid by the company for
the right to control the business acquired and the value of the acquired assembled workforce. The
goodwill is not deductible for tax purposes. Income of approximately $12 million was recognized
from the re-measurement to fair value of Monsantos previous equity interest in Seminium and is
included in other expense, net, in the Statements of Consolidated Operations for fiscal year 2010.

For the fiscal year 2010 acquisitions described above, the business operations and employees of the
acquired entities were included in the Seeds and Genomics segment results upon acquisition. The
purchase price allocations are summarized in the following table:

Aggregate

(Dollars in millions)

Acquisitions

Current Assets

$

51

Property, Plant and Equipment

25

Goodwill

20

Other Intangible Assets

28

Total Assets Acquired

124

Current Liabilities

38

Other Liabilities

7

Total Liabilities Assumed

45

Net Assets Acquired

$

79

Supplemental Information:

Net assets acquired

$

79

Cash acquired

3

Cash paid, net of cash acquired

$

76

2009 Acquisitions: In July 2009, Monsanto acquired the assets of WestBred, LLC, a
Montana-based company that specializes in wheat germplasm, for $49 million (net of cash acquired),
inclusive of transaction costs of $4 million. The acquisition will bolster the future growth of
Monsantos seeds and traits platform.

In December 2008, Monsanto acquired 100 percent of the outstanding stock of Aly Participacoes Ltda.
(Aly), which operates two sugarcane breeding and technology companies, CanaVialis S.A. and Alellyx
S.A., both of which are based in Brazil, for $264 million (net of cash acquired), inclusive of
transaction costs of less than $1 million.

All fiscal year 2009 acquisitions described above were included within Seeds and Genomics segment
from their respective dates of acquisition. The purchase price allocations are summarized in the
following table:

Aggregate

(Dollars in millions)

Acquisitions

Current Assets

$

2

Property, Plant and Equipment

6

Goodwill

131

Other Intangible Assets

33

Acquired In-process Research and Development

163

Other Assets



Total Assets Acquired

335

Current Liabilities

10

Other Liabilities

2

Total Liabilities Assumed

12

Net Assets Acquired

$

323

Supplemental Information:

Net assets acquired

$

323

Cash acquired



Cash paid, net of cash acquired

$

323

A charge of $163 million was recorded in R&D expenses in fiscal year 2009 for the write-off of
acquired IPR&D related to 2009 acquisitions. Of the $163 million, $162 million is related to the
write-off of acquired IPR&D from Aly. The income approach valuation method was used to determine
the fair value of the research projects. In developing assumptions for the valuation model,
Monsanto used historical expense of Aly and other comparable data to estimate expected pricing,
margins and expense levels. Management believed that the technological feasibility of the IPR&D was
not established and that the research had no alternative future uses. Accordingly, the amount
allocated to IPR&D was expensed immediately, in accordance with generally accepted accounting
principles. The significant assumptions used to determine the fair value of IPR&D related to the
Aly acquisition were as follows:

(Dollars in millions)

Weighted Average Discount Rate

17

%

Expected Costs to Complete (undiscounted)

$

166

Expected Years of Product Launches

2010 - 2019

On September 27, 2011, Monsanto acquired Beeologics; a technology start-up business based in
Israel, which researches and develops biological tools to provide targeted control of pests and
diseases. Beeologics results of operations will be included in Monsantos consolidated financial
statements prospectively beginning in fiscal year 2012 after the date of acquisition. The
acquisition of the company, which qualifies as a business under the Business Combinations topic of
the ASC, will allow Monsanto to further explore the use of biologicals broadly in agriculture to
provide farmers with innovative approaches to the challenges they face. Monsanto will use the base
technology from Beeologics as a part of its continuing discovery and development pipeline.
Acquisition costs were less than $1 million in fiscal year 2011, and classified as selling, general
and administrative expenses. The total cash paid and the fair value of the acquisition was $113
million (net of cash acquired), and it was primarily allocated to goodwill and intangibles. The
primary item that generated goodwill was the premium paid by the company for the right to control
the acquired business and technology.

For the acquisition described above, the business operations and employees of the acquired entity
are expected to be included in the Seeds and Genomics segment results upon acquisition. The
estimated fair values of the assets and liabilities,

summarized in the table below, of the acquired entity represent the preliminary purchase price
allocation. These allocations will be finalized as soon as the information becomes available,
however not to exceed one year from the acquisition date.

Beeologics

(Dollars in millions)

Acquisition

Current Assets

$

1

Property, Plant and Equipment



Goodwill

78

Other Intangible Assets

45

Acquired In-process Research and Development

4

Other Assets

8

Total Assets Acquired

136

Current Liabilities

12

Other Liabilities

10

Total Liabilities Assumed

22

Net Assets Acquired

$

114

Supplemental Information:

Net assets acquired

$

114

Cash acquired

1

Cash paid, net of cash acquired

$

113

Pro forma information related to the acquisition is not presented because the impact on the
Companys consolidated results of operations is not expected to be significant.

NOTE 5. RESTRUCTURING

Restructuring charges were recorded in the Statements of Consolidated Operations as follows:

Year Ended Aug. 31,

(Dollars in millions)

2011

2010

2009

Costs of Goods Sold(1)

$

(2

)

$

(114

)

$

(45

)

Restructuring Charges, Net(1)(2)

(1

)

(210

)

(361

)

Loss from Continuing Operations Before Income Taxes

(3

)

(324

)

(406

)

Income Tax Benefit

4

100

116

Net Income (Loss)

$

1

$

(224

)

$

(290

)

(1)

For the fiscal year ended 2011, the $2 million of restructuring charges recorded
in costs of goods sold related to the Seeds and Genomics segment. For the fiscal year ended
2010, the $114 million of restructuring charges recorded in cost of goods sold were split by
segment as follows: $13 million in Agricultural Productivity and $101 million in Seeds and
Genomics. For the fiscal year ended 2009, the $45 million of restructuring charges recorded in
cost of goods sold were split by segment as follows: $1 million in Agricultural Productivity
and $44 million in Seeds and Genomics. For the fiscal year ended 2011, the $1 million of
restructuring charges recorded in restructuring charges, net, were split by segment as
follows: $(8) million in Agricultural Productivity and $9 million in Seeds and Genomics. For
the fiscal year ended 2010, the $210 million of restructuring charges were split by segment as
follows: $79 million in Agricultural Productivity and $131 million in Seeds and Genomics. For
the fiscal year ended 2009, the $361 million of restructuring charges were split by segment as
follows: $113 million in Agricultural Productivity and $248 million in Seeds and Genomics.

(2)

The restructuring charges for the fiscal year ended 2011 include reversals of $37
million related to the 2009 Restructuring Plan. The reversals primarily related to severance.
Although positions originally included in the plan were eliminated, individuals found new
roles within the company due to attrition.

On June 23, 2009, the companys Board of Directors approved a restructuring plan (2009
Restructuring Plan) to take future actions to reduce costs in light of the changing market supply
environment for glyphosate. These actions are designed to enable Monsanto to stabilize the
Agricultural Productivity business and allow it to deliver optimal gross
profit and a sustainable level of operating cash in the coming years, while better aligning
spending and working capital needs. The company also announced that it will take steps to better
align the resources of its global seeds and traits business. These actions include certain product
and brand rationalization within the seed businesses. On Sept. 9, 2009, the company committed to
take additional actions related to the previously announced restructuring plan. Furthermore, while
implementing the plan, the company identified additional opportunities to better align the
companys resources, and on Aug.

26, 2010, committed to take additional actions. The plan was substantially completed in the first
quarter of fiscal year 2011, and the majority of the remaining payments are expected to be made by
the end of the first quarter in fiscal year 2012.

The following table displays the pretax charges of $3 million, $324 million, and $406 million
incurred by segment under the 2009 Restructuring Plan for the fiscal years ended 2011, 2010, and
2009, respectively, as well as the cumulative pretax charges of $733 million under the 2009
Restructuring Plan.

Year Ended Aug. 31, 2011

Year Ended Aug. 31, 2010

Year Ended Aug. 31, 2009

Seeds and

Agricultural

Seeds and

Agricultural

Seeds and

Agricultural

(Dollars in millions)

Genomics

Productivity

Total

Genomics

Productivity

Total

Genomics

Productivity

Total

Work Force Reductions

$

(21

)

$

(11

)

$

(32

)

$

85

$

47

$

132

$

175

$

63

$

238

Facility Closures / Exit Costs

26

3

29

46

31

77

3

47

50

Asset Impairments

Property, plant and
equipment

4



4

8

1

9

31

4

35

Inventory

2



2

93

13

106

24



24

Other intangible assets













59



59

Total Restructuring Charges, Net

$

11

$

(8

)

$

3

$

232

$

92

$

324

$

292

$

114

$

406

Cumulative Amount through Aug. 31, 2011

Seeds and

Agricultural

(Dollars in millions)

Genomics

Productivity

Total

Work Force Reductions

$

239

$

99

$

338

Facility Closures / Exit Costs

75

81

156

Asset Impairments

Property, plant and
equipment

43

5

48

Inventory

119

13

132

Other intangible assets

59



59

Total Restructuring Charges, Net

$

535

$

198

$

733

The companys written human resource policies are indicative of an ongoing benefit arrangement
with respect to severance packages. Benefits paid pursuant to an ongoing benefit arrangement are
specifically excluded from the Exit or Disposal Cost Obligations topic of the ASC, therefore
severance charges incurred in connection with the 2009 Restructuring Plan are accounted for when
probable and estimable as required under the Compensation  Nonretirement Postemployment Benefits
topic of the ASC. In addition, when the decision to commit to a restructuring plan requires an
asset impairment review, Monsanto evaluates such impairment issues under the Property, Plant and
Equipment topic of the ASC. Certain asset impairment charges were recorded in the fourth quarters
of 2010 and 2009 related to the decisions to shut down facilities under the 2009 Restructuring Plan
as the future cash flows for these facilities were insufficient to recover the net book value of
the related long-lived assets.

In fiscal year 2011, pretax restructuring charges of $3 million were recorded. The facility
closures/exit costs of $29 million relate primarily to the finalization of the termination of a
corn toller contract in the United States. In workforce reductions, approximately $13 million of
additional charges were offset by $37 million of reserve reversals and $8 million of reversals of
additional paid in capital for growth shares and stock options. Although positions originally
included in the plan were eliminated, individuals found new roles within the company due to
attrition. In asset impairments, property, plant and equipment impairments of $4 million related to
certain information technology assets in the United States. Inventory impairments of $2 million
were recorded in cost of goods sold related to discontinued corn and sorghum seed products in the
United States.

In fiscal year 2010, pretax restructuring charges of $324 million were recorded. The $132 million
in work force reductions relate primarily to Europe and the United States. The facility
closures/exit costs of $77 million relate primarily to the finalization of the termination of a
chemical supply contract in the United States and worldwide entity consolidation costs. In asset
impairments, inventory impairments of $106 million recorded in cost of goods sold related to
discontinued products worldwide.

In fiscal year 2009, pretax restructuring charges of $406 million were recorded. The $238 million
in work force reductions related to site closures and downsizing primarily in the United States and
Europe. The facility closures/exit costs of $50 million related primarily to the termination of a
chemical supply contract in the United States and the termination of chemical distributor contracts
in Central America. In asset impairments, property, plant, and equipment impairments of $35 million
related to certain manufacturing and technology breeding facilities in the United States, Europe,
and Central America that were closed in fiscal year 2010. Inventory impairments of $24 million were
also recorded for discontinued seed products in the United States and Europe. Other intangible
impairments of $59 million related to the discontinuation of certain seed brands, which included
$18 million related to the write-off of intellectual property for technology that the company
elected to no longer pursue. Of the $118 million total asset impairments in fiscal year 2009, $45
million was recorded in cost of goods sold and the remainder in restructuring charges.

The following table summarizes the activities related to the companys 2009 Restructuring Plan. See
Note 4  Business Combinations  for restructuring reserves related to acquisitions.

Work Force

Facility Closures /

Asset

(Dollars in millions)

Reductions

Exit Costs

Impairments

Total

Ending Liability as of Aug. 31, 2009

$

216

$

50

$



$

266

Restructuring charges recognized in fiscal year 2010

132

77

115

324

Cash payments

(180

)

(83

)



(263

)

Asset impairments and write-offs





(115

)

(115

)

Acceleration of stock-based compensation expense in

additional contributed capital

(4

)





(4

)

Foreign currency impact

(11

)





(11

)

Ending Liability as of Aug. 31, 2010

$

153

$

44

$



$

197

Restructuring charges recognized in fiscal year 2011

(32

)

29

6

3

Cash payments

(110

)

(73

)



(183

)

Asset impairments and write-offs





(6

)

(6

)

Reversal of acceleration of stock-based compensation

expense in additional contributed capital

8





8

Foreign currency impact

5





5

Ending Liability as of Aug. 31, 2011

$

24

$



$



$

24

NOTE 6. RECEIVABLES

The following table displays a roll forward of the allowance for doubtful trade receivables for
fiscal years 2009, 2010 and 2011.

(Dollars in millions)

Balance Sept. 1, 2008

$

218

Additions  charged to expense

23

Other(1)

(79

)

Balance Aug. 31, 2009

$

162

Additions  charged to expense

51

Other(1)

(70

)

Balance Aug. 31, 2010

$

143

Deductions  credited against expense

(8

)

Other(1)

(37

)

Balance Aug. 31, 2011

$

98

(1)

Includes reclassifications to long-term, write-offs, and foreign currency translation adjustments.

Effective with the second quarter of 2011, the company adopted the amended guidance in the
Receivables topic of the ASC which requires greater transparency about a companys allowance for
credit losses and the credit quality of its financing receivables. The company has financing
receivables that represent long-term customer receivable balances related to past due accounts
which are not expected to be collected within the current year. The long-term customer receivables
were $220 million and $239 million with a corresponding allowance for credit losses on these
receivables of $213 million and $226 million, as of Aug. 31, 2011, and Aug. 31, 2010, respectively.
These long-term customer receivable balances and the corresponding allowance are included in
long-term receivables, net on the Condensed Statements of Consolidated Financial Position. For
these long-term customer receivables, interest is no longer accrued when the receivable is
determined to be delinquent and classified as long-term based on estimated timing of collection.

The following table displays a roll forward of the allowance for credit losses related to long-term
customer receivables for fiscal years 2009, 2010 and 2011.

(Dollars in millions)

Balance Sept. 1, 2008

$

179

Additions  charged to expense

26

Other(1)

(33

)

Balance Aug. 31, 2009

$

172

Additions  charged to expense

7

Other(1)

47

Balance Aug. 31, 2010

$

226

Incremental Provision

20

Recoveries

(9

)

Other(1)

(24

)

Balance Aug. 31, 2011

$

213

(1)

Includes reclassifications from current, write-offs, and foreign currency translation adjustments.

In addition, the company has long-term contractual receivables. These receivables are
collected at fixed and determinable dates in accordance with the customer long-term agreement. The
long-term contractual receivables were $468 million and $500 million, as of Aug. 31, 2011, and Aug.
31, 2010, respectively, and did not have any allowance recorded related to these balances. These
receivables are included in long-term receivables, net on the Condensed Statements of Consolidated
Financial Position. There are no balances related to these long-term contractual receivables that
are past due. These receivables are outstanding with large, reputable companies who have been
timely with scheduled payments thus far and are considered to be fully collectible. Interest is
accrued on these receivables in accordance with the agreements and is included within interest
income in the Statements of Consolidated Operations. See Note 13  Deferred Revenue  for more
details on the significant agreements related to these long-term contractual receivables.

On an ongoing basis, the company evaluates credit quality of its financing receivables utilizing
aging of receivables, collection experience and write-offs, as well as evaluating existing economic
conditions, to determine if an allowance is necessary. As of Aug. 31, 2011, no significant
long-term receivable balances are considered to be impaired.

NOTE 7. CUSTOMER FINANCING PROGRAMS

Monsanto participates in a revolving financing program in Brazil that allows Monsanto to transfer
up to 1 billion Brazilian reais (approximately $630 million) for select customers in Brazil to a
special purpose entity (SPE), formerly a qualified special purpose entity (QSPE). Third parties,
primarily investment funds, hold an 88 percent senior
interest in the entity, and Monsanto holds the remaining 12 percent interest. Under the
arrangement, a recourse provision requires Monsanto to cover the first 12 percent of credit losses
within the program. The company has evaluated its relationship with the entity under the updated
guidance within the Consolidation topic of the ASC and, as a result, the entity has been
consolidated on a prospective basis effective Sept. 1, 2010. For further information on this topic,
see Note 8  Variable Interest Entities. Proceeds from customer receivables sold through the
financing program and derecognized from the Statements of

Consolidated Financial Position totaled $115 million for fiscal year 2010. As of Aug. 31, 2010,
Monsanto recorded a recourse provision of $5 million and the maximum potential amount of future
payments under the financing program is $15 million.

Monsanto has an agreement with a SPE in Argentina to transfer customer receivables and to service
such accounts. The company has evaluated its relationship with this entity under the updated
guidance within the Consolidation topic of the ASC and, as a result, the entity has been
consolidated on a prospective basis effective Sept. 1, 2010. For further information on this topic,
see Note 8  Variable Interest Entities. As of Aug. 31, 2010, there are no receivables sold
through this financing program that are delinquent and Monsanto recorded a bad debt allowance
related to these receivables of less than $1 million. The maximum amount of exposure under the
program is $1 million as of Aug. 31, 2010.

Monsanto has an agreement in the United States to sell customer receivables up to a maximum of $500
million and to service such accounts. These receivables qualify for sales treatment under the
Transfers and Servicing topic of the ASC and, accordingly, the proceeds are included in net cash
provided by operating activities in the Statements of Consolidated Cash Flows. The gross amount of
receivables sold totaled $3 million, $221 million and $319 million for fiscal years 2011, 2010 and
2009, respectively. The agreement includes recourse provisions and thus a liability is established
at the time of sale that approximates fair value based upon the companys historical collection
experience and a current assessment of credit exposure. There is no recourse liability recorded by
Monsanto and there are no potential future payments under the recourse provisions of the agreement
for previously sold receivables as of Aug. 31, 2011. The recourse liability of $2 million was
recorded as of Aug. 31, 2010. The outstanding balance of the receivables sold is $3 million and
$223 million as of Aug. 31, 2011, and Aug. 31, 2010, respectively. There were delinquent accounts
of $3 million as of Aug. 31, 2011, and Aug. 31, 2010.

Monsanto also sells accounts receivable in the United States and European regions, both with and
without recourse. The sales within these programs qualify for sales treatment under the Transfers
and Servicing topic of the ASC and, accordingly, the proceeds are included in net cash provided by
operating activities in the Statements of Consolidated Cash Flows. The gross amounts of receivables
sold totaled $61 million, $107 million and $72 million for fiscal years 2011, 2010 and 2009,
respectively. The liability for the guarantees for sales with recourse is recorded at an amount
that approximates fair value, based on the companys historical collection experience for the
customers associated with the sale of the receivables and a current assessment of credit exposure.
There is no liability balance as of Aug. 31, 2011. The liability recorded by Monsanto was less than
$1 million as of Aug. 31, 2010. The maximum potential amount of future payments under the recourse
provisions of the agreements is $46 million as of Aug. 31, 2011. The outstanding balance of the
receivables sold is $55 million and $86 million as of Aug. 31, 2011, and Aug. 31, 2010,
respectively. There were no delinquent loans as of Aug. 31, 2011, or Aug. 31, 2010.

Monsanto has additional agreements with lenders to establish programs that provide financing of up
to 550 million Brazilian reais (approximately $350 million) for selected customers in Brazil.
Monsanto provides a guarantee of the accounts in the event of customer default. The term of the
guarantee is equivalent to the term of the bank loans. The liability for the guarantees is recorded
at an amount that approximates fair value, based on the companys historical collection experience
with customers that participate in the program and a current assessment of credit exposure. The
guarantee liability recorded by Monsanto is $1 million and $3 million as of Aug. 31, 2011, and Aug.
31, 2010, respectively. If performance is required under the guarantee, Monsanto may retain amounts
that are subsequently collected from customers. The maximum potential amount of future payments
under the guarantee is $49 million as of Aug. 31, 2011. The account balance outstanding for these
programs is $49 million and $100 million as of Aug. 31, 2011, and Aug. 31, 2010, respectively.
There were delinquent loans of $1 million and $2 million as of Aug. 31, 2011, and Aug. 31, 2010,
respectively.

Monsanto also has similar agreements with banks that provide financing to its customers in the
United States, Europe and Latin America where Monsanto provides a guarantee of the accounts in the
event of customer default. The maximum potential amount of future payments under the guarantees is
$27 million. The guarantee liability recorded by Monsanto is $2 million as of Aug. 31, 2011, and
Aug. 31, 2010.

Monsanto previously established a revolving financing program to provide financing of up to $250
million to selected customers in the United States through a third-party specialty lender. The
program was terminated in the third quarter of fiscal year 2009. Under the financing program,
Monsanto originated customer loans on behalf of the lender, which was a SPE, serviced the loans and
provided a first-loss guarantee of up to $130 million. Following origination, the lender

transferred the loans to multiseller commercial paper conduits through a nonconsolidated QSPE which
was treated as a sale, in accordance with the Transfers and Servicing topic of the ASC. Monsanto
accounted for the program as if it were the originator of the loans and the transferor selling the
loans to the QSPE, and accounted for the guarantee in accordance with the Guarantees topic of the
ASC.

Monsanto did not recognize any servicing asset or liability because the servicing fee was
considered adequate compensation for the servicing activities. Servicing activities, including
discounts on the sale of customer receivables, resulted in income of $1 million for 2009. Proceeds
from customer loans sold through the financing program totaled $130 million for fiscal year 2009.
These proceeds are included in net cash provided by operating activities in the Statement of
Consolidated Cash Flows. There were no loan balances outstanding as of Aug. 31, 2011, or Aug. 31,
2010.

NOTE 8. VARIABLE INTEREST ENTITIES

Effective Sept. 1, 2010, Monsanto prospectively adopted the accounting standard update regarding
improvements to financial reporting by enterprises involving variable interest entities (VIEs). A
VIE is a legal entity that lacks sufficient equity to finance its activities, or the equity
investors of the entity as a group lack any of the characteristics of a controlling interest.
Monsanto is involved with various special purpose entities and other entities that are deemed to be
VIEs. Monsanto has determined that the company holds variable interests in entities that are
established as revolving financing programs. These programs allow the company to transfer a limited
amount of customer receivables to a VIE. One program is in Brazil and the other is in Argentina. In
addition, Monsanto has various variable interests in biotechnology companies that focus on plant
gene research, development and commercialization. These variable interests have also been
determined to be VIEs.

If a company is considered the primary beneficiary of a VIE, the company is required to consolidate
the entity. The primary beneficiary of a VIE is the enterprise that has both the power to direct
the activities most significant to the economic performance of the VIE and the obligation to absorb
losses or receive benefits that could potentially be significant to the VIE. For all VIEs in which
the company has a variable interest, the company performs ongoing qualitative assessments to
determine whether it is the primary beneficiary. In determining whether Monsanto is the primary
beneficiary, a number of factors are considered, including the structure of the entity, contractual
provisions that grant any additional rights to influence or control the economic performance of the
VIE, and the companys obligation to absorb significant losses. In addition, the company determines
which activities most significantly impact the economic performance of the VIE and whether the
company has any rights that would allow it to direct those activities. If Monsanto is determined to
be the primary beneficiary, the assets, liabilities and operations of the VIE are consolidated.

As a result of the adoption of the updated accounting guidance, Monsanto was required to
consolidate certain VIEs that are established as revolving financing programs including the special
purpose entity referred to in Note 7  Customer Financing Programs. As of the date of the initial
consolidation of these VIEs, the company measured the assets and liabilities of the newly
consolidated VIEs at their carrying value. The company was not required to deconsolidate any VIEs
as of Sept. 1, 2010. The cumulative effect of the adoption of this guidance was insignificant to
additional contributed capital, retained earnings and accumulated other comprehensive loss and,
therefore, not identified separately on the Statement of Consolidated Shareowners Equity and
Comprehensive Income but is recorded within the Statement of Consolidated Operations.

Consolidated VIEs

Under the accounting guidance effective prior to Sept. 1, 2010, none of the interests in VIEs held
were consolidated by Monsanto. For the most part, the VIEs involving the revolving financing
programs are funded by investments from the company and other third parties, primarily investment
funds, and have been established to service Monsantos customer receivables. Creditors have no
recourse against Monsanto in the event of default by these VIEs nor does the company have any
implied or unfunded commitments to these VIEs. The companys financial or other support provided to
these VIEs is limited to its original investment. Even though Monsanto holds a subordinate interest
in the
VIEs, the VIEs were established to service transactions involving the company and the company
determines the receivables that are included in the revolving financing programs. Therefore, the
determination is that Monsanto has the power to direct the activities most significant to the
economic performance of the VIEs. As a result, the company is the primary beneficiary of these VIEs
and, effective Sept.

1, 2010, these VIEs have been consolidated in Monsantos Consolidated Financial Statements.
The assets of these VIEs may only be used to settle the obligations of the respective entity.
Third-party investors in the VIEs do not have recourse to the general assets of Monsanto other than
the maximum exposure to loss relating to the VIE. The following table presents the carrying value
of assets and liabilities, which are identified as restricted assets and liabilities on the
companys Condensed Statement of Consolidated Financial Position, and the maximum exposure to loss
relating to the VIEs for which Monsanto is the primary beneficiary.

As of Aug. 31, 2011

(Dollars in millions)

Financing Programs VIEs

Cash and cash equivalents

$

96

Trade receivables, net

51

Total Assets

$

147

Total Liabilities



Maximum Exposure to Loss

$

11

Non-Consolidated VIEs

Monsanto has variable interests through investments and arrangements with biotechnology companies
that focus on plant gene research, development, and commercialization. The company has not provided
financial or other support with respect to these investments or arrangements other than its
original interest. The company also has no implied or unfunded commitments to these VIEs. The
company determined that it was not the primary beneficiary due to the relative size of Monsantos
investment in comparison to the total equity of the VIEs, the level of the companys obligation to
absorb losses or right to receive benefits from the VIEs, and the companys inability to direct the
activities that most significantly impact the economic performance of the VIEs. Monsantos maximum
exposure to loss on these variable interests is limited to the amount of the companys investment
in the entity. The following table presents the carrying value of assets and liabilities and the
maximum exposure to loss relating to VIEs that the company does not consolidate:

The increase in the excess of FIFO over LIFO cost is primarily the result of increases in certain
raw materials and production costs. During 2011, inventory quantities declined, resulting in the
liquidation of LIFO inventory layers carried at higher costs than current year purchases and
production. The income statement effect of such liquidation on cost of sales was an increase of
approximately $2 million.

Inventory obsolescence reserves are utilized as valuation accounts and effectively establish a new
cost basis. The following table displays a roll forward of the inventory obsolescence reserve for
fiscal years 2009, 2010 and 2011.

(Dollars in millions)

Balance Sept. 1, 2008

$

264

Additions  charged to expense

196

Deductions and other(1)

(123

)

Balance Aug. 31, 2009

$

337

Additions  charged to expense

219

Deductions and other(1)

(224

)

Balance Aug. 31, 2010

$

332

Additions  charged to expense

240

Deductions and other(1)

(234

)

Balance Aug. 31, 2011

$

338

(1)

Deductions and other includes disposals and foreign currency translation
adjustments.

As part of Monsantos 2009 Restructuring Plan, inventory impairment charges of $2 million and
$106 million were recorded in fiscal year 2011 and 2010, respectively. See Note 5  Restructuring
 for additional information.

NOTE 10. PROPERTY, PLANT AND EQUIPMENT

Components of property, plant and equipment were as follows:

As of Aug. 31,

(Dollars in millions)

2011

2010

Land and Improvements

$

545

$

502

Buildings and Improvements

1,946

1,750

Machinery and Equipment

5,034

4,591

Computer Software

587

531

Construction In Progress and Other

585

694

Total Property, Plant and Equipment

8,697

8,068

Less Accumulated Depreciation

(4,303

)

(3,841

)

Property, Plant and Equipment, Net

$

4,394

$

4,227

Gross assets acquired under capital leases of $42 million and $37 million are included
primarily in machinery and equipment as of Aug. 31, 2011, and Aug. 31, 2010, respectively. See Note
15  Debt and Other Credit Arrangements  and Note 26  Commitments and Contingencies  for
related capital lease obligations.

As part of Monsantos 2009 Restructuring Plan, asset impairment charges of $4 million and $9
million were recorded in fiscal years 2011 and 2010, respectively. The impairment charges for 2011
were related to certain information technology
assets. In 2010, the charges resulted from buildings and improvements, machinery and equipment and
the associated accumulated depreciation. See Note 5  Restructuring  for additional information.

The fiscal year 2011 and 2010 annual goodwill impairment tests were performed as of March 1, 2011
and 2010, and no indications of goodwill impairment existed as of either date. Goodwill is tested
for impairment at least annually, or more frequently if events or circumstances indicate it might
be impaired. There were no events or changes in circumstances indicating that goodwill might be
impaired as of Aug. 31, 2011. As of fiscal year 2011, accumulated goodwill impairment charges since
the adoption of FASB Statement No. 142, Goodwill and Other Intangible Assets (codified in ASC 350)
in 2002 were $2 billion. The charges related to Seeds and Genomics and were primarily a result of a
change in the valuation method (from an undiscounted cash flow methodology to a discounted cash
flow methodology) upon adoption of ASC 350 as well as unanticipated delays in biotechnology
acceptance and regulatory approvals.

Changes in the net carrying amount of goodwill for fiscal years 2010 and 2011, by segment, are as
follows:

Seeds and

Agricultural

(Dollars in millions)

Genomics

Productivity

Total

Balance as of Sept. 1, 2009

$

3,156

$

62

$

3,218

Acquisition activity (see Note 4)

21



21

Effect of foreign currency translation adjustments and other

(30

)

(5

)

(35

)

Balance as of Aug. 31, 2010

$

3,147

$

57

$

3,204

Acquisition activity (see Note 4)

51



51

Effect of foreign currency translation adjustments

110



110

Balance as of Aug. 31, 2011

$

3,308

$

57

$

3,365

In fiscal year 2011, goodwill increased due to the current year acquisitions of Divergence and
Pannon Seeds and the effects of foreign currency translation adjustments. In fiscal year 2010,
goodwill decreased due to the effect of foreign currency translation adjustments. This was offset
by increases due to the 2010 acquisitions of Seminium and a seed processing business in Chile and
the updating of the preliminary purchase price allocations for some of the 2009 acquisitions. See
Note 4  Business Combinations  for further information.

Information regarding the companys other intangible assets is as follows:

As of Aug. 31, 2011

As of Aug. 31, 2010

Carrying

Accumulated

Carrying

Accumulated

(Dollars in millions)

Amount

Amortization

Net

Amount

Amortization

Net

Acquired Germplasm

$

1,189

$

(692

)

$

497

$

1,161

$

(640

)

$

521

Acquired Intellectual Property

973

(710

)

263

866

(649

)

217

Trademarks

352

(110

)

242

344

(94

)

250

Customer Relationships

335

(146

)

189

317

(113

)

204

In Process Research & Development

45



45







Other

136

(63

)

73

121

(50

)

71

Total

$

3,030

$

(1,721

)

$

1,309

$

2,809

$

(1,546

)

$

1,263

The increase in acquired intellectual property during fiscal year 2011 primarily resulted from
the purchase of licenses that provide Monsanto the access to use technology patents. The increase
in IPR&D during fiscal year 2011 resulted from the Divergence acquisition described in Note 4 
Business Combinations. The increases in the overall other intangible balances were primarily due to
the effect of foreign currency translation adjustments.

Total amortization expense of other intangible assets was $150 million in fiscal year 2011, $158
million in fiscal year 2010, and $151 million in fiscal year 2009.

The estimated intangible asset amortization expense for each of the five succeeding fiscal years is
as follows:

(Dollars in millions)

Amount

2012

$

142

2013

115

2014

121

2015

117

2016

113

NOTE 12. INVESTMENTS AND EQUITY AFFILIATES

Investments

As of Aug. 31, 2011, Monsanto has short-term investments outstanding of $302 million. The
investments are comprised of treasury bills and commercial paper with original maturities of one
year or less. See Note 16  Fair Value Measurements.

During fiscal year 2010, Monsanto invested in long-term debt securities with a cost of $15 million,
which were classified as available-for-sale. The investments were recorded in other assets in the
Statements of Consolidated Financial Position at their fair value of $10 million and net unrealized
losses (net of deferred taxes) of $3 million were included in accumulated other comprehensive loss
in shareowners equity as of Aug. 31, 2010. As a result of the adoption of a new accounting
standard within the Consolidation topic of the ASC, the special purpose entity in which the company
invested is now consolidated and the investment is no longer included in other assets in the
Statement of Consolidated Financial Position. See Note 8  Variable Interest Entities  for
further discussion related to these debt securities.

Monsanto has investments in long-term equity securities, which are considered available-for-sale.
As of Aug. 31, 2011, and Aug. 31, 2010, these long-term equity securities are recorded in other
assets in the Statements of Consolidated Financial Position at a fair value of $26 million and $23
million, respectively. Net unrealized gains (net of deferred taxes) of less than $1 million and $3
million are included in accumulated other comprehensive loss in shareowners equity related to
these investments as of Aug. 31, 2011, and Aug. 31, 2010, respectively. Monsanto recorded an
impairment of $16 million related to one of these long-term equity securities in fiscal year 2010.

Equity Affiliates

Monsanto owns a 19 percent interest in a seed supplier that produces, conditions, and distributes
corn and soybean seeds. Monsanto is accounting for this investment as an equity method investment
as Monsanto has the ability to exercise significant influence over the seed supplier. As of Aug.
31, 2011, and Aug. 31, 2010, this investment is recorded in other assets in the Statements of
Consolidated Financial Position at $67 million and $65 million, respectively. During fiscal years
2011 and 2010, Monsanto purchased $184 million and $162 million of inventory from the seed supplier
and recorded sales of inventory to the seed supplier of $14 million and $12 million, respectively.
As of Aug. 31, 2011, and Aug. 31, 2010, the amount payable to the seed supplier is $2 million and
$5 million, respectively, and is recorded in accounts payable in the Statements of Consolidated
Financial Position. As of Aug. 31, 2011, and Aug. 31, 2010, there were prepayments of $9 million
and $7 million included in other current assets in the Statements of Consolidated Financial
Position for inventory that will be delivered in fiscal year 2012 and 2011, respectively.

NOTE 13. DEFERRED REVENUE

In 2008, Monsanto entered into a corn herbicide tolerance and insect control trait technologies
agreement with Pioneer Hi-Bred International, Inc. Among its provisions, the agreement modified
certain existing corn license agreements between the parties. Under the agreement, which requires
fixed annual payments, the company recorded a receivable and deferred revenue of $635 million in
first quarter 2008. Cumulative cash receipts will be $725 million over an eight-year period.
Revenue of $79 million related to this agreement was recorded in fiscal years 2011, 2010 and 2009.
As of Aug. 31, 2011, and Aug. 31,

2010, the remaining receivable balance is $393 million and $470 million and the remaining deferred
revenue balance is $317 million and $397 million, respectively. The interest portion of this
receivable is $13 million, $16 million and $19 million for fiscal years 2011, 2010 and 2009,
respectively.

In 2008, Monsanto and Syngenta entered into a Genuity Roundup Ready 2 Yield Soybean License
Agreement which grants Syngenta access to Monsantos Genuity Roundup Ready 2 Yield Soybean
technology in consideration of royalty payments from Syngenta, based on sales. The minimum
obligation from Syngenta over the nine-year contract period is $81 million. Revenue of $4 million
related to this agreement was recorded in fiscal year 2011. As of Aug. 31, 2011, and Aug. 31, 2010,
the remaining receivable balance is $75 million and $73 million and the remaining deferred revenue
balance is $62 million and $67 million, respectively. The interest portion of this receivable is $3
million for fiscal years 2011, 2010 and 2009.

NOTE 14. INCOME TAXES

The components of income from continuing operations before income taxes were:

Year Ended Aug. 31,

(Dollars in millions)

2011

2010

2009

United States

$

1,640

$

1,230

$

2,137

Outside United States

734

260

781

Total

$

2,374

$

1,490

$

2,918

The components of income tax provision from continuing operations were:

Factors causing Monsantos income tax provision from continuing operations to differ from the U.S.
federal statutory rate were:

Year Ended Aug. 31,

(Dollars in millions)

2011

2010

2009

U.S. Federal Statutory Rate

$

831

$

522

$

1,021

U.S. R&D Tax Credit

(34

)

(10

)

(33

)

U.S. Domestic Manufacturing Deduction

(37

)

(22

)

(45

)

Lower Ex-U.S. Rates

(98

)

(130

)

(122

)

State Income Taxes

52

33

58

Valuation Allowances

(7

)

10

4

Adjustment for Unrecognized Tax Benefits

(1

)

3

(16

)

Other

11

(27

)

(54

)

Income Tax Provision

$

717

$

379

$

813

Deferred income tax balances are related to:

As of Aug. 31,

(Dollars in millions)

2011

2010

Net Operating Loss and Other Carryforwards

$

971

$

865

Employee Fringe Benefits

394

504

Restructuring and Impairment Reserves

154

168

Intangibles

152

195

Inventories

132

149

Environmental and Litigation Reserves

87

97

Allowance for Doubtful Accounts

58

56

Other

316

284

Valuation Allowance

(44

)

(57

)

Total Deferred Tax Assets

$

2,220

$

2,261

Property, Plant and Equipment

$

527

$

409

Intangibles

454

454

Other

115

45

Total Deferred Tax Liabilities

1,096

908

Net Deferred Tax Assets

$

1,124

$

1,353

As of Aug. 31 2011, Monsanto had available approximately $1.5 billion in net operating loss
carryforwards (NOLs), most of which related to Brazilian operations, which have an indefinite
carryforward period. Monsanto also had available approximately $320 million of U.S. foreign tax
credit carryforwards, which expire from 2015 through 2020. Management regularly assesses the
likelihood that deferred tax assets will be recovered from future taxable income. To the extent
management believes that it is more likely than not that a deferred tax asset will not be realized,
a valuation allowance is established. As of Aug. 31 2011, management continues to believe it is
more likely than not that the company will realize the deferred tax assets in Brazil and the United
States.

Income taxes and remittance taxes have not been recorded on approximately $3.6 billion of
undistributed earnings of foreign operations of Monsanto, either because any taxes on dividends
would be substantially offset by foreign tax credits, or because Monsanto intends to reinvest those
earnings indefinitely. It is not practicable to estimate the income tax liability that might be
incurred if such earnings were remitted to the United States.

Tax authorities regularly examine the companys returns in the jurisdictions in which Monsanto does
business. Due to the nature of the examinations, it may take several years before they are
completed. Management regularly assesses the tax risk of the companys return filing positions for
all open years. During fiscal year 2010, Monsanto recorded a
favorable adjustment to the income tax reserve as a result of the conclusion of an IRS audit for
tax years 2007 and 2008, ex-U.S. audits and the resolution of various state income tax matters.
Monsanto is appealing one issue related to the IRS audit for tax years

2007 and 2008. During fiscal year 2009, Monsanto recorded a favorable adjustment to the income tax
reserve as a result of the conclusion of an IRS audit for tax years 2005 and 2006, ex-U.S. audits
and the resolution of various state income tax matters.

As of Aug. 31, 2011, Monsanto had total unrecognized tax benefits of $348 million, of which $273
million would favorably impact the effective tax rate if recognized. As of Aug. 31, 2010, Monsanto
had total unrecognized tax benefits of $341 million, of which $276 million would favorably impact
the effective tax rate if recognized.

Accrued interest and penalties included in the Statements of Consolidated Financial Position were
$55 million and $46 million as of Aug. 31, 2011, and Aug. 31, 2010, respectively. Monsanto
recognizes accrued interest and penalties related to unrecognized tax benefits as a component of
income tax expense. For the 12 months ended Aug. 31, 2011, the company recognized $8 million of
income tax expense for interest and penalties. For the 12 months ended Aug. 31, 2010, the company
recognized a benefit of $5 million in the income tax provision for interest and penalties.

A reconciliation of the beginning and ending balance of unrecognized tax benefits is as follows:

(Dollars in millions)

Balance Sept. 1, 2009

$

358

Increases for prior year tax positions

42

Decreases for prior year tax positions

(102

)

Increases for current year tax positions

55

Settlements

(6

)

Lapse of statute of limitations

(9

)

Foreign currency translation

3

Balance Aug. 31, 2010

$

341

Increases for prior year tax positions

18

Decreases for prior year tax positions

(8

)

Increases for current year tax positions

13

Settlements

(1

)

Lapse of statute of limitations

(22

)

Foreign currency translation

7

Balance Aug. 31, 2011

$

348

Monsanto operates in various countries throughout the world and, as a result, files income tax
returns in numerous jurisdictions. These tax returns are subject to examination by various federal,
state and local tax authorities. For Monsantos major tax jurisdictions, the tax years that remain
subject to examination are shown below:

Jurisdiction

Tax Years

Brazil

19992011

U.S. state and local income taxes

20002011

Argentina

20012011

U.S. federal income tax

20072011

If the companys assessment of unrecognized tax benefits is not representative of actual
outcomes, the companys financial statements could be significantly impacted in the period of
settlement or when the statute of limitations expires. Management estimates that it is reasonably
possible that the total amount of uncertain tax benefits could decrease by as much as $115 million
within the next 12 months, primarily as a result of the resolution of audits currently in progress
in several jurisdictions involving issues common to large multinational corporations, and the
lapsing of the statute of limitations in multiple jurisdictions.

Monsanto has a $2 billion credit facility agreement with a group of banks that provides a four-year
senior unsecured revolving credit facility through April 1, 2015. This credit facility replaces the
previous $2 billion credit facility established in 2007. This facility was initiated to be used for
general corporate purposes, which may include working capital requirements, acquisitions, capital
expenditures, refinancing, and support of commercial paper borrowings. The agreement also provides
for European euro-denominated loans, letters of credit, and swingline borrowings, and allows
certain designated subsidiaries to borrow with a company guarantee. Covenants under this credit
facility restrict maximum borrowings. There are no compensating balances, but the facility is
subject to various fees, which are based on the companys credit ratings. As of Aug. 31, 2011,
Monsanto was in compliance with all debt covenants, and there were no outstanding borrowings under
this credit facility.

Short-Term Debt

As of Aug. 31,

(Dollars in millions)

2011

2010

Current Maturities of Long-Term Debt

$

626

$

193

Notes Payable to Banks

52

48

Total Short-Term Debt

$

678

$

241

The fair value of the total short-term debt was $710 million and $241 million as of Aug. 31,
2011, and Aug. 31, 2010, respectively. The weighted average interest rate on notes payable to banks
was 6.7 percent and 4.5 percent as of Aug. 31, 2011, and Aug. 31, 2010, respectively.

As of Aug. 31, 2011, the company did not have any outstanding commercial paper, but it had
short-term borrowings to support ex-U.S. operations throughout the year, which had weighted-average
interest rates as indicated above. Certain of these bank loans also act to limit exposure to
changes in foreign-currency exchange rates.

In April 2010, Monsanto completed the purchase of the Chesterfield Village Research Center from
Pfizer. There is debt outstanding of $136 million on the purchase price which is included in
short-term debt on the Statement of Consolidated Financial Position as of Aug. 31, 2011.

Long-Term Debt

As of Aug. 31,

(Dollars in millions)

2011

2010

7⅜% Senior Notes, Due 2012(1)

$



$

485

51/2% Senior Notes, Due 2035(1)

395

395

23/4% Senior Notes, Due 2016(1)

299



5⅛% Senior Notes, Due 2018(1)

299

299

51/2% Senior Notes, Due 2025(1)

277

274

5⅞% Senior Notes, Due 2038(1)

247

247

Other (including Capital Leases)(2)

26

162

Total Long-Term Debt

$

1,543

$

1,862

(1)

Amounts are net of unamortized discounts. For the 51/2% Senior Notes due
2025, amount is also net of the unamortized premium of $38 million and $40 million as of Aug.
31, 2011, and Aug. 31, 2010, respectively.

(2)

Includes $136 million as of Aug. 31, 2010 related to the Chesterfield Village
Research Center purchase.

The fair value of the total long-term debt was $1,797 million and $2,094 million as of Aug.
31, 2011, and Aug. 31, 2010, respectively.

In 2002, Monsanto filed a shelf registration with the SEC for the issuance of up to $2.0
billion of registered debt (2002 shelf registration) and issued $800 million in 7⅜% Senior Notes.
As of Aug. 31, 2011, $485 million of the 7⅜% Senior Notes are due on Aug. 15, 2012 (see discussion
below regarding a debt exchange for $314 million of the 7⅜% Senior Notes).

In May 2005, Monsanto filed a new shelf registration with the SEC (2005 shelf registration) that
allowed the company to issue up to $2.0 billion of debt, equity and hybrid offerings (including
debt securities of $950 million remaining available under the May 2002 shelf registration
statement). In July 2005, Monsanto issued $400 million of 51/2% Senior Notes under the 2005 shelf
registration, which are due on July 15, 2035 (51/2% 2035 Senior Notes). In April 2008, Monsanto
issued $300 million of 5⅛% Senior Notes under the 2005 shelf registration, which are due on April
15, 2018 (5⅛% 2018 Senior Notes). The net proceeds from the issuance of the 5⅛% 2018 Senior Notes
were used to finance the expansion of corn seed production facilities. Also in April 2008, Monsanto
issued $250 million of 57/8% Senior Notes under the 2005 shelf registration, which are due on April
15, 2038 (57/8% 2038 Senior Notes). The net proceeds from the sale of the 57/8% 2038 Senior Notes were
used to repay $238 million of 4% Senior Notes that were due on May 15, 2008. The 2005 shelf
registration expired in December 2008.

In August 2005, Monsanto exchanged $314 million of new 51/2% Senior Notes due 2025 (51/2% 2025 Senior
Notes) for $314 million of its outstanding 7⅜% Senior Notes due 2012, which were issued in 2002.
The exchange was conducted as a private transaction with holders of
the outstanding 7⅜% Senior
Notes who certified to the company that they were qualified institutional buyers within the
meaning of Rule 144A under the Securities Act of 1933. The transaction has been accounted for as an
exchange of debt under the Debt topic of the ASC. Under the terms of the exchange, the company paid
a premium of $53 million to holders participating in the exchange, and the $53 million premium will
be amortized over the life of the new 51/2% 2025 Senior Notes. As a result of the debt premium, the
effective interest rate on the 51/2% 2025 Senior Notes will be 7.035% over the life of the debt. The
exchange of debt allowed the company to adjust its debt-maturity schedule while also allowing it to
take advantage of market conditions which the company considered to be favorable.

In October 2005, the company filed a registration statement with the SEC on Form S-4 with the
intention to commence a registered exchange offer during fiscal year 2006 to provide holders of the
newly issued privately placed notes with the opportunity to exchange such notes for substantially
identical notes registered under the Securities Act of 1933. In February 2006, Monsanto issued $314
million aggregate principal amount of its 51/2% Senior Notes due 2025, in exchange for the same
principal amount of its 51/2% Senior Notes due 2025 which had been issued in the private placement
transaction in August 2005. The offering of the notes issued in February was registered under the
Securities Act of 1933.

In October 2008, Monsanto filed a new shelf registration with the SEC (2008 shelf registration)
that allows the company to issue an unlimited capacity of debt, equity and hybrid offerings. The
2008 shelf registration will expire on Oct. 31, 2011.

In July 2010, the company entered into forward-starting interest rate swaps with a total notional
amount of $300 million. The purpose of the swaps was to hedge the variability of the forecasted
interest payments on this expected debt issuance that may result from changes in the benchmark
interest rate before the debt is issued. In April 2011, the term of the swaps ended. An unrealized
loss, net of tax, of $7 million was recorded in accumulated other comprehensive loss to reflect the
aftertax change in the fair value of the forward-starting interest rate swaps as of Aug. 31, 2010,
which will be subsequently recognized in earnings over the term of the debt. In April 2011,
Monsanto issued $300 million of 2.75% Senior Notes under the 2008 shelf registration, which are due
on April 15, 2016 (2.75% 2016 Senior Notes). The net proceeds from the sale of the 2.75% 2016
Senior Notes were used for general corporate purposes, including refinancing of the companys
indebtedness.

Monsanto plans to issue new fixed-rate debt on or before Aug. 15, 2012, to repay $485 million of
7⅜% Senior Notes that are due on Aug. 15, 2012. In March 2009, the company entered into
forward-starting interest rate swaps with a total notional amount of $250 million. The purpose of
the swaps was to hedge the variability of the forecasted interest payments on this expected debt
issuance that may result from changes in the benchmark interest rate before the debt is issued.
Unrealized losses, net of tax, of $14 million and $8 million were recorded in accumulated other
comprehensive loss to reflect the aftertax change in the fair value
of the forward-starting
interest rate swaps as of Aug. 31, 2011, and Aug. 31, 2010, respectively. In August 2010, the
company entered into forward-starting interest rate swaps with a total notional amount of $225
million. The purpose of the swaps was to hedge the variability of the forecasted interest payments
on this expected debt issuance that may result from changes in the benchmark interest rate before
the debt is issued. Unrealized losses, net of tax, of $10 million and $9 million were recorded in accumulated other comprehensive loss to reflect the aftertax change in
the fair value of the

Monsanto determines the fair market value of its financial assets and liabilities based on quoted
market prices, estimates from brokers, and other appropriate valuation techniques. The company uses
the fair value hierarchy established in the Fair Value Measurements and Disclosures topic of the
ASC, which requires an entity to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value.

The following tables set forth by level Monsantos assets and liabilities that were accounted for
at fair value on a recurring basis as of Aug. 31, 2011, and Aug. 31, 2010. As required by the Fair
Value Measurements and Disclosures topic of the ASC, assets and liabilities are classified in their
entirety based on the lowest level of input that is a significant component of the fair value
measurement. Monsantos assessment of the significance of a particular input to the fair value
measurement requires judgment and may affect the classification of fair value assets and
liabilities within the fair value hierarchy levels.

As allowed by the Derivatives and Hedging topic of the ASC, commodity derivative
assets and liabilities have been offset by cash collateral due and paid under a master netting
arrangement.

Level 1 measurements are based on quoted market prices in active markets. Level 2 measurements
are based on estimates from brokers or through market observable assumptions for similar items in
active markets, including forward and spot
prices, interest rates and volatilities adjusted, as necessary, for credit risk. Level 3
measurements are based on an independent

Management is ultimately responsible for all fair values presented in the companys consolidated
financial statements. The company performs analysis and review of the information and prices
received from third parties to ensure that the prices represent a reasonable estimate of fair
value. This process involves quantitative and qualitative analysis. As a result of the analysis, if
the company determines there is a more appropriate fair value based upon the available market data,
the price received from the third party is adjusted accordingly.

The following table summarizes the changes in fair value of the Level 3 asset for the year ended
Aug. 31, 2011.

(Dollars in millions)

Balance Sept. 1, 2010

$

10

Elimination due to consolidation of variable interest entities

(10

)

Balance Aug. 31, 2011

$



The following table summarizes the changes in fair value of the Level 3 asset for the year
ended Aug. 31, 2010.

(Dollars in millions)

Balance Sept. 1, 2009

$



Purchases, sales, issuances, settlements and payments received

15

Unrealized loss on investments included in accumulated other comprehensive loss

(5

)

Balance Aug. 31, 2010

$

10

See Note 5  Restructuring  for details on nonrecurring measurements of assets at fair
value during fiscal year 2011. There were no other significant measurements of assets or
liabilities at fair value on a nonrecurring basis subsequent to their initial recognition during
fiscal year 2011.

Measurements during fiscal year 2010 of assets and liabilities at fair value on a nonrecurring
basis subsequent to their initial recognition were as follows:

Property, Plant and Equipment, Net: Property, plant and equipment with a carrying value of $21
million was written down to its implied fair value of less than $1 million, resulting in an
impairment charge of $21 million, which was primarily included in cost of goods sold in the
Statement of Consolidated Operations for fiscal year 2010. Long-lived assets held for sale with a
carrying amount of $2 million were written down to their implied fair value of less than $1
million, resulting in an impairment charge of $2 million, which was primarily included in cost of
goods sold in the Statement of Consolidated Operations for fiscal year 2010. Costs to sell were not
significant.

Other Intangible Assets, Net: Other intangible assets with a carrying value of $14 million were
written down to their implied fair value of less than $1 million, resulting in an impairment charge
of $14 million, which was primarily included in research and development expenses in the Statement
of Consolidated Operations for fiscal year 2010.

Monsantos business and activities expose it to a variety of market risks, including risks related
to changes in commodity prices, foreign currency exchange rates and interest rates. These financial
exposures are monitored and managed by the company as an integral part of its market risk
management program. This program recognizes the unpredictability of financial markets and seeks to
reduce the potentially adverse effects that market volatility could have on operating results. As
part of its market risk management strategy, Monsanto uses derivative instruments to protect fair
values and cash flows from fluctuations caused by volatility in currency exchange rates, commodity
prices and interest rates.

Cash Flow Hedges

The company uses foreign currency options and foreign currency forward contracts as hedges of
anticipated sales or purchases denominated in foreign currencies. The company enters into these
contracts to protect itself against the risk that the eventual net cash flows will be adversely
affected by changes in exchange rates.

Monsantos commodity price risk management strategy is to use derivative instruments to minimize
significant unanticipated earnings fluctuations that may arise from volatility in commodity prices.
Price fluctuations in commodities, mainly in corn and soybeans, can cause the actual prices paid to
production growers for corn and soybean seeds to differ from anticipated cash outlays. Monsanto
uses commodity futures and options contracts to manage these risks. Monsantos energy and raw
material risk management strategy is to use derivative instruments to minimize significant
unanticipated manufacturing cost fluctuations that may arise from volatility in natural gas, diesel
and ethylene prices.

Monsantos interest rate risk management strategy is to use derivative instruments, such as
forward-starting interest rate swaps, to minimize significant unanticipated earnings fluctuations
that may arise from volatility in interest rates of the companys borrowings and to manage the
interest rate sensitivity of its debt.

For derivative instruments that are designated and qualify as cash flow hedges, the effective
portion of the gain or loss on the derivative is reported as a component of accumulated other
comprehensive loss and reclassified into earnings in the period or periods during which the hedged
transaction affects earnings. Gains and losses on the derivative representing either hedge
ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in
current earnings.

The maximum term over which the company is hedging exposures to the variability of cash flow (for
all forecasted transactions) is 11 months for foreign currency hedges, 36 months for commodity
hedges and 12 months for interest rate hedges. During the next 12 months, a pretax net gain of
approximately $73 million will be reclassified from accumulated other comprehensive loss into
earnings. No cash flow hedges were discontinued during fiscal years 2011 or 2009. During fiscal
year 2010, a pretax loss of $29 million was reclassified into earnings as a result of the
discontinuance of cash flow hedges because it was probable that the original forecasted transaction
would not occur by the end of the originally specified time period.

Fair Value Hedges

The company uses commodity futures and options contracts as fair value hedges to manage the value
of its soybean inventory. For derivative instruments that are designated and qualify as fair value
hedges, both the gain or loss on the derivative and the offsetting loss or gain on the hedged item
attributable to the hedged risk are recognized in current earnings. No fair value hedges were
discontinued during fiscal years 2011, 2010 or 2009.

Net Investment Hedges

To protect the value of its investment from adverse changes in exchange rates, the company may,
from time to time, hedge a portion of its net investment in one or more of its foreign
subsidiaries. Gains or losses on derivative instruments that are designated as a net investment
hedge are included in accumulated foreign currency translation adjustment and reclassified into
earnings in the period during which the hedged net investment is sold or liquidated.

Derivatives Not Designated as Hedging Instruments

The company uses foreign currency contracts to hedge the effects of fluctuations in exchange rates
on foreign currency denominated third-party and intercompany receivables and payables. Both the
gain or loss on the derivative and the offsetting loss or gain on the hedged item attributable to
the hedged risk are recognized in current earnings.

The company uses commodity option contracts to hedge anticipated cash payments to corn growers in
the United States, Mexico and Brazil, which can fluctuate with changes in corn price. Because these
option contracts do not meet the provisions specified by the Derivatives and Hedging topic of the
ASC, they do not qualify for hedge accounting treatment. Accordingly, the gain or loss on these
derivatives is recognized in current earnings.

To reduce credit exposure in Latin America, Monsanto collects payments on certain customer accounts
in grain. Such payments in grain are negotiated at or near the time Monsantos products are sold to
the customers and are valued at the prevailing grain commodity prices. By entering into forward
sales contracts related to grain, Monsanto mitigates the commodity price exposure from the time a
contract is signed with a customer until the time a grain merchant collects the grain from the
customer on Monsantos behalf. The forward sales contracts do not qualify for hedge accounting
treatment under the Derivatives and Hedging topic of the ASC. Accordingly, the gain or loss on
these derivatives is recognized in current earnings.

Monsanto uses interest rate contracts to minimize the variability of forecasted cash flows arising
from the companys VIE. The interest rate contracts do not qualify for hedge accounting treatment
under the Derivatives and Hedging Topic of the ASC. Accordingly, the gain or loss on these
derivatives is recognized in current earnings.

Certain of Monsantos grower contracts that include minimum guaranteed payment provisions are
considered derivatives under the Derivatives and Hedging Topic of the ASC. These contracts do not
qualify for hedge accounting treatment. Accordingly, the gain or loss on these derivatives is
recognized in current earnings.

Financial instruments are neither held nor issued by the company for trading purposes.

The notional amounts of the companys derivative instruments outstanding as of Aug. 31, 2011, and
Aug. 31, 2010, were as follows:

The fair values of the companys derivative instruments outstanding as of Aug. 31, 2011, and
Aug. 31, 2010, were as follows:

Balance Sheet Location

Fair Value

As of Aug. 31,

(Dollars in millions)

2011

2010

Asset Derivatives:

Derivatives designated as hedges:

Foreign exchange contracts

Miscellaneous receivables

$

1

$

23

Commodity contracts

Other current assets(1)

93

12

Commodity contracts

Other assets(1)

16

4

Total derivatives designated as hedges

110

39

Derivatives not designated as hedges:

Foreign exchange contracts

Miscellaneous receivables

2

3

Commodity contracts

Trade receivables, net

30

5

Commodity contracts

Miscellaneous receivables

2



Commodity contracts

Other current assets(1)

3



Total derivatives not designated as hedges

37

8

Total Asset Derivatives

$

147

$

47

Liability Derivatives:

Derivatives designated as hedges:

Foreign exchange contracts

Miscellaneous short-term accruals

$

9

$



Commodity contracts

Other current assets(1)

2



Commodity contracts

Miscellaneous short-term accruals

6

14

Commodity contracts

Other liabilities

4

8

Interest rate contracts

Miscellaneous short-term accruals

38

11

Interest rate contracts

Other liabilities



28

Total derivatives designated as hedges

59

61

Derivatives not designated as hedges:

Foreign exchange contracts

Miscellaneous short-term accruals

5

5

Commodity contracts

Trade receivables, net

1

4

Commodity contracts

Miscellaneous short-term accruals

29

9

Total derivatives not designated as hedges

35

18

Total Liability Derivatives

$

94

$

79

(1)

As allowed by the Derivatives and Hedging topic of the ASC, certain corn and soybean
commodity derivative assets and liabilities have been offset by cash collateral due and paid
under a master netting arrangement. Therefore, these commodity contracts that are in an asset
or liability position are included in asset accounts within the Statements of Consolidated
Financial Position. See Note 16  Fair Value Measurements  for a reconciliation to amounts
reported in the Statements of Consolidated Financial Position as of Aug. 31, 2011, and Aug.
31, 2010.

The gains and losses on the companys derivative instruments were as follows:

Amount of Gain (Loss)

Recognized in AOCL(1)

Amount of Gain (Loss)

(Effective Portion)

Recognized in Income(2)(3)

Year Ended Aug. 31,

Year Ended Aug. 31,

(Dollars in millions)

2011

2010

2009

2011

2010

2009

Income StatementClassification

Derivatives Designated as Hedges:

Fair value hedges:

Commodity contracts(4)

$

(20

)

$

6

$

(9

)

Cost of goods sold

Cash flow hedges:

Foreign exchange contracts

$

(16

)

$

(12

)

$

34

(12

)

(5

)

35

Net sales

Foreign exchange contracts

(20

)

19

40

5

18

32

Cost of goods sold

Commodity contracts

228

43

(243

)

7

(94

)

23

Cost of goods sold

Interest rate contracts

(4

)

(53

)

14

(7

)

(6

)

(6

)

Interest expense

Net investment hedges:

Foreign exchange contracts



(3

)

21







N/A

(5)

Total Derivatives Designated as Hedges

188

(6

)

(134

)

(27

)

(81

)

75

Derivatives Not Designated as Hedges:

Foreign exchange contracts(6)

(9

)

(46

)

(140

)

Other expense, net

Commodity contracts

2

(10

)



Net sales

Commodity contracts

(1

)

(1

)

14

Cost of goods sold

Commodity contracts



(2

)



Other expense, net

Total Derivatives Not Designated as Hedges

(8

)

(59

)

(126

)

Total Derivatives

$

188

$

(6

)

$

(134

)

$

(35

)

$

(140

)

$

(51

)

(1)

Accumulated Other Comprehensive Loss (AOCL).

(2)

For derivatives designated as cash flow and net investment hedges under the
Derivatives and Hedging topic of the ASC, this represents the effective portion of the gain
(loss) reclassified from AOCL into income during the period.

(3)

Gain or loss on commodity cash flow hedges includes a gain of $2 million, a gain of
$1 million and a loss of $3 million from ineffectiveness for fiscal years 2011, 2010 and 2009,
respectively. Additionally, the gain or loss on commodity cash flow hedges includes a loss
from discontinued hedges of $29 million for fiscal year 2010. There were no hedges
discontinued in fiscal years 2011 or 2009. No amounts were excluded from the assessment of
hedge effectiveness during fiscal years 2011, 2010 or 2009.

(4)

Gain or loss on commodity fair value hedges was offset by a gain of $18 million, a
loss of $11 million and a gain of $8 million on the underlying hedged inventory during fiscal
years 2011, 2010 and 2009, respectively. A loss of $2 million, $5 million and $1 million
during fiscal years 2011, 2010 and 2009, respectively, was included in cost of goods sold due
to ineffectiveness.

(5)

Gain or loss would be reclassified into income only during the period in which the
hedged net investment was sold or liquidated.

(6)

Gain or loss on foreign exchange contracts not designated as hedges was offset by a
foreign currency transaction loss of $40 million, a gain of $14 million and a gain of $25
million during fiscal years 2011, 2010 and 2009, respectively.

Most of the companys outstanding foreign currency derivatives are covered by International
Swap Dealers Association (ISDA) Master Agreements with the counterparties. There are no
requirements to post collateral under these agreements. However, should Monsantos credit rating
fall below a specified rating immediately following the merger of Monsanto with another entity, the
counterparty may require all outstanding derivatives under the ISDA Master Agreement to be settled
immediately at current market value, which equals carrying value. Foreign currency derivatives that
are not covered by ISDA Master Agreements do not have credit-risk-related contingent provisions.
Most of Monsantos outstanding commodity derivatives are listed commodity futures, and the company
is required by the relevant commodity exchange to post collateral each day to cover the change in
the fair value of these futures in the case of an unrealized loss position. The counterparty is
required to post collateral each day to cover the change in fair value of these futures in the case
of an unrealized gain position. Non-exchange-traded commodity derivatives are covered by the
aforementioned ISDA Master Agreements and are subject to the same credit-risk-related contingent
provisions, as are the companys interest rate derivatives. The aggregate fair value of all
derivative instruments under ISDA Master Agreements in a liability position was $50 million on Aug.
31, 2011, and $64 million on Aug. 31, 2010, which is the amount that would be required for
settlement if the credit-risk-related contingent provisions underlying these agreements were
triggered.

Monsanto invests its excess cash primarily in money market funds throughout the world in
high-quality short-term debt instruments. Other investments are made in highly rated securities or
with major banks. Such investments are made only in instruments issued or enhanced by high-quality
institutions. As of Aug. 31, 2011, and Aug. 31, 2010, the company had no financial instruments that
represented a significant concentration of credit risk. Limited amounts are invested in any single
institution to minimize risk. The company has not incurred any credit risk losses related to those
investments.

The company sells a broad range of agricultural products to a diverse group of customers throughout
the world. In the United States, the company makes substantial sales to relatively few large
wholesale customers. The companys business is highly seasonal, and it is subject to weather
conditions that affect commodity prices and seed yields. Credit limits, ongoing credit evaluation,
and account monitoring procedures are used to minimize the risk of loss. Collateral or credit
insurance is obtained when it is deemed appropriate by the company.

Monsanto regularly evaluates its business practices to minimize its credit risk. During fiscal
years 2011, 2010 and 2009, the company engaged multiple banks primarily in the United States,
Argentina, Brazil and Europe in the development of customer financing programs. For further
information on these programs, see Note 7  Customer Financing Programs.

NOTE 18. POSTRETIREMENT BENEFITS  PENSIONS

Most of Monsantos U.S. employees are covered by noncontributory pension plans sponsored by the
company. Pension benefits are based on an employees years of service and compensation level.
Funded pension plans in the United States and outside the United States were funded in accordance
with the companys long-range projections of the plans financial condition. These projections took
into account benefits earned and expected to be earned, anticipated returns on pension plan assets,
and income tax and other regulations.

Components of Net Periodic Benefit Cost

Total pension cost for Monsanto employees included in the Statements of Consolidated Operations was
$122 million, $85 million and $80 million in fiscal years 2011, 2010 and 2009, respectively. The
information that follows relates to all of the pension plans in which Monsanto employees
participated. The components of pension cost for these plans were:

Monsanto uses a measurement date of August 31 for its pension plans. The funded status of the
pension plans as of Aug. 31, 2011, and Aug. 31, 2010, was as follows:

U.S.

Outside the U.S.

Total

Year Ended Aug. 31,

Year Ended Aug. 31,

Year Ended Aug. 31,

(Dollars in millions)

2011

2010

2011

2010

2011

2010

Change in Benefit Obligation:

Benefit obligation at beginning of period

$

1,950

$

1,744

$

319

$

307

$

2,269

$

2,051

Service cost

59

49

9

6

68

55

Interest cost

84

91

14

14

98

105

Plan participants contributions





2

1

2

1

Plan amendments



(3

)



1



(2

)

Actuarial (gain) loss

(74

)

210

(15

)

32

(89

)

242

Benefits paid

(136

)

(138

)

(9

)

(23

)

(145

)

(161

)

Special termination benefits







1



1

Settlements / curtailments



(3

)

(132

)

(6

)

(132

)

(9

)

Currency loss (gain)





37

(26

)

37

(26

)

Other(3)





24

12

24

12

Benefit Obligation at End of Period

$

1,883

$

1,950

$

249

$

319

$

2,132

$

2,269

Change in Plan Assets:

Fair value of plan assets at beginning of period

$

1,383

$

1,281

$

243

$

235

$

1,626

$

1,516

Actual return on plan assets

200

126

13

25

213

151

Employer contribution(1)

272

114

12

19

284

133

Plan participants contributions





2

1

2

1

Settlements





(16

)



(16

)



Transfer of plan assets(2)





(116

)



(116

)



Benefits paid(1)

(136

)

(138

)

(9

)

(23

)

(145

)

(161

)

Currency gain (loss)





31

(22

)

31

(22

)

Other







8



8

Plan Assets at End of Period

$

1,719

$

1,383

$

160

$

243

$

1,879

$

1,626

Net Amount Recognized

$

164

$

567

$

89

$

76

$

253

$

643

(1)

Employer contributions and benefits paid include $7 million and $12 million paid
from employer assets for unfunded plans in fiscal years 2011 and 2010, respectively.

(2)

The transfer of plan assets is attributable to the transfer of the liabilities and
assets of the Monsanto sponsored retirement plan in the Netherlands to an industry
multi-employer plan.

(3)

Other includes early retirement liabilities of $21 million related to restructuring
plans in Europe.

Weighted-average assumptions used to determine benefit obligations as of Aug. 31, 2011, and
Aug. 31, 2010, were as follows:

U.S.

Outside the U.S.

Year Ended Aug. 31,

Year Ended Aug. 31,

2011

2010

2011

2010

Discount Rate

4.59

%

4.35

%

5.24

%

4.25

%

Rate of Compensation Increase

4.00

%

4.00

%

3.82

%

3.79

%

Fiscal year 2012 pension expense, which will be determined using assumptions as of Aug. 31,
2011, is expected to decrease compared with fiscal year 2011 expense. The company increased its
discount rate assumption as of Aug. 31, 2011, to reflect current economic conditions of market
interest rates.

The U.S. accumulated benefit obligation (ABO) was $1.8 billion as of Aug. 31, 2011, and Aug. 31,
2010. The ABO for plans outside of the United States was $171 million and $268 million as of Aug.
31, 2011, and Aug. 31, 2010, respectively.

U.S. Plans: The asset allocations for Monsantos U.S. pension plans as of Aug. 31, 2011, and Aug.
31, 2010, and the target allocation range for fiscal year 2012, by asset category, follow. The fair
value of assets for these plans was $1.7 billion and $1.4 billion as of Aug. 31, 2011, and Aug. 31,
2010, respectively.

Target

Percentage of Plan Assets

Allocation

As of Aug. 31,

Asset Category

2012

2011

2010

Public Equity Securities

43-59

%

50.9

%

54.6

%

Private Equity Investments

2-8

%

4.0

%

4.1

%

Debt Securities

32-46

%

41.6

%

33.4

%

Real Estate

2-8

%

2.5

%

2.9

%

Other

0-3

%

1.0

%

5.0

%

Total

100.0

%

100.0

%

The expected long-term rate of return on these plan assets was 7.5 percent in fiscal year
2011, 7.75 percent in fiscal year 2010, and 8.0 percent in fiscal year 2009. The expected long-term
rate of return on plan assets is based on historical and projected rates of return for current and
planned asset classes in the plans investment portfolio. Assumed projected rates of return for
each asset class were selected after analyzing historical experience and future expectations of the
returns and volatility of the various asset classes. The overall expected rate of return for the
portfolio is based on the target asset allocation for each asset class and adjusted for historical
and expected experience of active portfolio management results compared to benchmark returns and
the effect of expenses paid for plan assets.

The general principles guiding investment of U.S. pension plan assets are embodied in the Employee
Retirement Income Security Act of 1974 (ERISA). These principles include discharging the companys
investment responsibilities for the exclusive benefit of plan participants and in accordance with
the prudent expert standards and other ERISA rules and regulations. Investment objectives for the
companys U.S. pension plan assets are to optimize the long-term return on plan assets while
maintaining an acceptable level of risk, to diversify assets among asset classes and investment
styles, and to maintain a long-term focus.

Late in 2010, an asset/liability study was conducted to determine the optimal strategic asset
allocation to meet the plans projected long-term benefit obligations and desired funded status.
The target asset allocation resulting from the asset/liability study is outlined in the previous
table.

Plans Outside the United States: The weighted-average asset allocation for Monsantos pension plans
outside of the United States as of Aug. 31, 2011, and Aug. 31, 2010, and the weighted-average
target allocation for fiscal year 2012, by asset category, follow. The fair value of plan assets
for these plans was $160 million and $243 million as of Aug. 31, 2011, and Aug. 31, 2010,
respectively.

Target

Percentage of Plan Assets

Allocation(1)

As of Aug. 31,

Asset Category

2012

2011

2010

Equity Securities

46.0

%

40.4

%

30.6

%

Debt Securities

41.4

%

49.0

%

54.5

%

Other

12.6

%

10.6

%

14.9

%

Total

100.0

%

100.0

%

(1)

Monsantos plans outside the United States have a wide range of target
allocations, and therefore the 2012 target allocations shown above reflect a weighted-average
calculation of the target allocations of each of the plans.

The weighted-average expected long-term rate of return on the plans assets was 6.5 percent in
fiscal year 2011, 6.6 percent in fiscal year 2010, and 7.1 percent in fiscal year 2009.
Determination of the expected long-term rate of return for plans outside the United States is
consistent with the U.S. methodology.

The following table summarizes the changes in fair value of the Level 3 investments as of Aug. 31,
2011.

(Dollars in millions)

Balance Sept. 1, 2009

$

6

Purchases, sales, issuances, settlements and payments received

5

Balance Sept. 1, 2010

$

11

Purchases

6

Settlements

(3

)

Unrealized gains in investments

1

Balance Aug. 31, 2011

$

15

The following table reconciles the investments at fair value to the plan asset as of Aug. 31,
2011.

(Dollars in millions)

Total Investments at Fair Value

$

160

Non-interest bearing cash

(1

)

Other receivables and payables

1

Plan Assets at the End of the Period

$

160

In managing the plan assets, risk associated with funded status risk, market risk, liquidity
risk and operational risk is considered. The design of a plans overall investment strategy will
take into consideration one or more of the following elements: a plans liability characteristics,
diversification across asset classes, diversification within asset classes and investment
management firm diversification. Investment policies consistent with the plans overall investment
strategy are established.

For assets that are measured using quoted prices in active markets, the total fair value is the
published market price per unit multiplied by the number of units held without consideration of
transaction costs, which have been determined to be immaterial. Assets that are measured using
significant other observable inputs are primarily valued by reference to quoted prices of markets
that are not active. The following methods and assumptions were used to estimate the fair value of
each class of financial instrument:

Cash and cash equivalents: The carrying value of cash represents fair value as it consists of
actual currency, and is classified as Level 1.

Debt securities: Debt securities consist of U.S. and foreign corporate credit, U.S. and foreign
government issues (including related agency debentures and mortgages), U.S. state and municipal
securities, and U.S. term bank loans. Debt securities are generally priced by institutional bids,
which reflect estimated values based on underlying model frameworks at various dealers and vendors,
or are formally listed on exchanges, where dealers exchange bid and ask offers to arrive at most
executed transaction prices. Term bank loans are priced in a similar fashion to corporate debt
securities. All debt securities included in the plans are classified as Level 2.

Common and preferred stock: The plans common and preferred stock primarily consists of
investments in listed U.S. and international company stock. Most stock investments are valued using
quoted prices from the various public markets. Most equity securities trade on formal exchanges,
both domestic and foreign (e.g., NYSE, NASDAQ, LSE), and can be accurately described as active
markets. The observable valuation inputs are unadjusted quoted prices that represent active market
trades, and are classified as Level 1. Some common and preferred stock holdings are not listed on
established exchanges or actively traded inputs to determine their values are obtainable from
public sources, and are thus classified as Level 2.

Private equity investments: The U.S. plan invests in private equity, which as an asset class is
generally characterized as requiring long-term commitments where liquidity is typically limited.
Therefore, private equity does not have an actively traded market with readily observable prices.
Valuations depend on a variety of proprietary model methodologies, some of which may be derived
from publicly available sources. However, there are also material inputs that are not readily
observable, and that require subjective assessments. All private equity investments are classified
as Level 3.

Partnership and joint venture interests: The U.S. plan invests in these investments which include
interests in two limited partnership funds which are considered absolute return funds in which the
manager takes long and short positions to generate returns. While most individual securities in
these strategies would fall under Level 1 or Level 2 if held individually, the lack of available
quotes and unique structure of the funds cause these to be classified as Level 3.

Real estate investments: The U.S. plan invests in U.S. real estate through indirect ownership
entities, which are structured as limited partnerships or private real estate investment trusts
(REITs). Real estate investments are generally illiquid long-term assets valued in large part using
inputs not readily observable in the public markets. There are no formal listed markets for either
the funds underlying commercial properties, or for shares in any given fund. Real estate fund
holdings are appraised and valued on an on-going basis. In the case of the investments structured
as partnerships, while a net asset value (NAV) is not explicitly calculated, audited financial
statements and valuations are produced on an annual basis. For investments structured as private
REITs, redemption requests for units held are at the discretion of fund managers. All real estate
investments are classified as Level 3.

Interest in pooled funds: Investments are structured as commingled pools, or funds. These funds are
comprised of other broad asset category types, such as equity and debt securities, derivatives and
cash and equivalents. The underlying holdings are all based on unadjusted quoted market prices in
an active exchange market, and the total fund value can be ascertained from readily available
market data. However, because there are no publicly available market quotes for the pooled funds
themselves, all pooled funds are classified as Level 2.

Derivatives: The U.S. plan is permitted to use financial derivative instruments to hedge certain
risks and for investment purposes. The plan enters into futures contracts in the normal course of
its investing activities to manage market risk associated with the plans equity and fixed income
investments and to achieve overall investment portfolio objectives. The credit risk associated with
these contracts is minimal as they are traded on organized exchanges and settled daily.
Exchange-traded equity index and interest rate futures are measured at fair value using quoted
market prices making them qualify as Level 1 investments. The notional value of all futures
derivatives was $198 million as of Aug. 31, 2011.

The U.S. plan also holds listed common and preferred stock short sale positions, which involves a
counterparty arrangement with a prime broker. The existence of the prime broker counter-party
relationship introduces the possibility that short sale market values may need to be adjusted to
reflect any counter-party risk, however no such adjustment was required as of Aug. 31, 2011.
Therefore, the short positions have been classified as Level 2, and their notional value was $30
million as of Aug. 31, 2011.

Insurance backed securities: Insurance backed securities are contracts held with an insurance
company. Level 1 securities are quoted prices in active markets for identical assets. The Level 3
fair value of the investments is determined based upon the value of the underlying investments as
determined by the insurance company.

Collateral held under securities lending agreement: The U.S. plan participates in a securities
lending program through Northern Trust. Securities loaned are fully collateralized by cash and U.S.
government securities. Because the collateral pool itself lacks a formal public market and price
quotes, it is classified as Level 2.

Substantially all regular full-time U.S. employees hired prior to May 1, 2002, and certain
employees in other countries become eligible for company-subsidized postretirement health care
benefits if they reach retirement age while employed by Monsanto and have the requisite service
history. Employees who retired from Monsanto prior to Jan. 1, 2003, were eligible for retiree life
insurance benefits. These postretirement benefits are unfunded and are generally based on the
employees years of service or compensation levels, or both. The costs of postretirement benefits
are accrued by the date the employees become eligible for the benefits. Total postretirement
benefit costs for Monsanto employees and the former employees included in Monsantos Statements of
Consolidated Operations in fiscal years 2011, 2010 and 2009, were $19 million, $8 million and $14
million, respectively.

The following information pertains to the postretirement benefit plans in which Monsanto employees
and certain former employees of Pharmacia allocated to Monsanto participated, principally health
care plans and life insurance plans. The cost components of these plans were:

Year Ended Aug. 31,

(Dollars in millions)

2011

2010

2009

Service Cost for Benefits Earned During the Period

$

10

$

9

$

11

Interest Cost on Benefit Obligation

10

12

17

Amortization of Prior Service Credit

(1

)

(3

)



Amortization of Actuarial Gain



(10

)



Amortization of Unrecognized Net Gain





(14

)

Total Net Periodic Benefit Cost

$

19

$

8

$

14

The other changes in plan assets and benefit obligations recognized in accumulated other
comprehensive loss for the year ended Aug. 31, 2011, and Aug. 31, 2010, were:

The following assumptions, calculated on a weighted-average basis, were used to determine the
postretirement costs for the principal plans in which Monsanto employees participated:

Year Ended Aug. 31,

2011

2010

2009

Discount Rate

4.10

%

5.30

%

6.50

%

Initial Trend Rate for Health Care Costs

7.00

%

6.00

%

6.50

%

Ultimate Trend Rate for Health Care Costs

5.00

%

5.00

%

5.00

%

A 7.0 percent annual rate of increase in the per capita cost of covered health care benefits
was assumed for 2011. This assumption is consistent with the plans recent experience and
expectations of future growth. It is assumed that the rate will decrease gradually to 5 percent for
2017 and remain at that level thereafter. Assumed health care cost trend rates have an effect on
the amounts reported for the health care plans. A 1 percentage-point change in assumed health care
cost trend rates would have the following effects:

1 Percentage-Point

1 Percentage-Point

(Dollars in millions)

Increase

Decrease

Effect on Total of Service and Interest Cost

$

1

$

(1

)

Effect on Postretirement Benefit Obligation

$

2

$

(2

)

Monsanto uses a measurement date of August 31 for its other postretirement benefit plans. The
status of the postretirement health care, life insurance and employee disability benefit plans in
which Monsanto employees participated was as follows for the periods indicated:

Year Ended Aug. 31,

(Dollars in millions)

2011

2010

Change in Benefit Obligation:

Benefit obligation at beginning of period

$

264

$

248

Service cost

10

9

Interest cost

10

12

Actuarial (gain) loss

(9

)

21

Plan participant contributions

3

3

Plan amendments



(2

)

Medicare Part D subsidy receipts

2

2

Benefits paid(1)

(30

)

(29

)

Benefit Obligation at End of Period

$

250

$

264

(1)

Benefits paid under the other postretirement benefit plans include $30 million and
$29 million from employer assets in fiscal years 2011 and 2010, respectively.

Weighted-average assumptions used to determine benefit obligations as of Aug. 31, 2011, and
Aug. 31, 2010, were as follows:

Year Ended Aug. 31,

2011

2010

Discount Rate Postretirement

4.30

%

4.10

%

Discount Rate Postemployment

2.20

%

2.30

%

Initial Trend Rate for Health Care Costs(1)

7.00

%

7.00

%

Ultimate Trend Rate for Health Care Costs

5.00

%

5.00

%

(1)

As of Aug. 31, 2011, this rate is assumed to decrease gradually to 5 percent
for 2017 and remain at that level thereafter.

As of Aug. 31, 2011, and Aug. 31, 2010, amounts recognized in the Statements of Consolidated
Financial Position were as follows:

Asset allocation is not applicable to the companys other postretirement benefit plans because
these plans are unfunded.

The following table provides a summary of the pretax components of the amount recognized in
accumulated other comprehensive loss:

Year Ended Aug. 31,

(Dollars in millions)

2011

2010

Actuarial (Gain) Loss

$

(8

)

$

1

Prior Service Credit

(4

)

(4

)

Total

$

(12

)

$

(3

)

The estimated net loss and prior service credit for the defined benefit postretirement plans
that will be amortized from accumulated other comprehensive income into net periodic benefit cost
over the next fiscal year are $6 million and $1 million, respectively.

Expected Cash Flows

Information about the expected cash flows for the other postretirement benefit plans follows:

(Dollars in millions)

U.S.

Employer Contributions 2012

$

25

Benefit Payments(1)

2012

25

2013

26

2014

26

2015

26

2016

26

2017-2021

105

(1)

Benefit payments are net of expected federal subsidy receipts related to
prescription drug benefits granted under the Medicare Prescription Drug, Improvement and
Modernization Act of 2003, which are estimated to be $2 million through 2013.

Expected contributions include other postretirement benefits of $25 million to be paid from
employer assets in fiscal year 2012. Total benefits expected to be paid include both the companys
share of the benefit cost and the participants share of the cost, which is funded by participant
contributions to the plan.

Other Sponsored Plans

Other plans are offered to certain eligible employees. There is an accrual of $37 million and $43
million as of Aug. 31, 2011, and Aug. 31, 2010, respectively, in the Statements of Consolidated
Financial Position for anticipated payments to employees who have retired or terminated their
employment.

The U.S. tax-qualified Monsanto Savings and Investment Plan (Monsanto SIP) was established in June
2001 as a successor to a portion of the Pharmacia Corporation Savings and Investment Plan. The
Monsanto SIP is a defined contribution profit-sharing plan with an individual account for each
participant. Employees who are 18 years of age or older are generally eligible to participate in
the plan. The Monsanto SIP provides for voluntary contributions, generally ranging from 1 percent
to 25 percent of an employees eligible pay. Monsanto matches employee contributions to the plan
with shares released from the leveraged employee stock ownership plan (Monsanto ESOP). The Monsanto
ESOP is leveraged by debt due to Monsanto. The debt, which was $2.4 million as of Aug. 31, 2011, is
repaid primarily through company contributions and dividends paid on Monsanto common stock held in
the ESOP. The Monsanto ESOP debt was restructured in December 2004 to level out the future
allocation of stock in an impartial manner intended to ensure equitable treatment for and generally
to be in the best interests of current and future plan participants consistent with the level of
benefits that Monsanto intended for the plan to provide to participants. To that end, the terms of
the restructuring were determined pursuant to an arms length negotiation between Monsanto and an
independent trust company as fiduciary for the plan. In this role, the independent fiduciary
determined that the restructuring, including certain financial commitments and enhancements that
were or will be made in the future by Monsanto to benefit participants and beneficiaries of the
plan, including the increased diversification rights that were provided to certain participants,
was completed in accordance with the best interests of plan participants. As a result of these
enhancements related to the 2004 restructuring, a liability of $54 million and $51 million was
included in other liabilities in the Statements of Consolidated Financial Position as of Aug. 31,
2011, and Aug. 31, 2010, respectively, to reflect the 2004 ESOP enhancements. The liability related
to the 2004 ESOP refinancing is required to be paid no later than Dec. 31, 2017.

The Monsanto ESOP debt was again restructured in November 2008. The terms of the restructuring were
determined pursuant to an arms length negotiation between Monsanto and an independent trust
company as fiduciary for the plan. In this role, the independent fiduciary determined that the
restructuring, including certain financial commitments and enhancements that were or will be made
in the future by Monsanto to benefit participants and beneficiaries of the plan, was in the best
interests of participants in the plans ESOP component. As a result of these enhancements related
to the 2008 ESOP restructuring, Monsanto committed to funding an additional $8 million to the plan,
above the number of shares currently scheduled for release under the restructured debt schedule.
Pursuant to the agreement, a $4 million Special Allocation was allocated proportionately to
eligible participants in May 2009 and funded using plan forfeitures and dividends on Monsanto
common stock held in the ESOP suspense account. As of Aug. 31, 2011, and Aug. 31, 2010, a liability
of $5 million was included in other liabilities in the Statements of Consolidated Financial
Position to reflect the 2008 ESOP enhancements. The liability related to the 2008 ESOP refinancing
is required to be paid no later than Dec. 31 of the fifth year following the loan repayment date
and in no case later than Dec. 31, 2032.

As of Aug. 31, 2011, the Monsanto ESOP held 6.6 million shares of Monsanto common stock (allocated
and unallocated). The unallocated shares of Monsanto common stock held by the ESOP are allocated
each year to employee savings accounts as matching contributions in accordance with the terms of
the Monsanto SIP. During fiscal year 2011, 0.6 million Monsanto shares were allocated specifically
to Monsanto participants, leaving 0.7 million shares of Monsanto common stock remaining in the
Monsanto ESOP and unallocated as of Aug. 31, 2011.

Contributions to the plan are required annually in amounts sufficient to fund ESOP debt repayment.
Dividends paid on the shares held by the Monsanto ESOP were $8 million in 2011, $9 million in 2010,
and $9 million in 2009. These dividends
were greater than the cost of the shares allocated to the participants and the Monsanto
contributions resulting in total ESOP expense of less than $1 million in 2011, 2010, and 2009.

Other Sponsored Plans

De Ruiter Seeds Group, B.V. (De Ruiter) maintained a qualified company-sponsored defined
contribution savings plan covering eligible employees. Effective Dec. 31, 2009, this plan was
frozen. Effective Oct. 1, 2009, De Ruiter employees became eligible to participate in the Monsanto
SIP. The assets of the De Ruiter Savings Plan that had been allocated to the participants were
transferred to the Monsanto SIP on Dec. 31, 2009.

Stock-based compensation expense of $105 million, $105 million and $131 million was recognized
under Compensation  Stock Compensation topic of the ASC in fiscal years 2011, 2010 and 2009,
respectively. Stock-based compensation expense recognized during the period is based on the value
of the portion of share-based payment awards that are ultimately expected to vest. Compensation
cost capitalized as part of inventory was $7 million, $8 million, and $7 million as of Aug. 31,
2011, Aug. 31, 2010, and Aug. 31, 2009. The Compensation  Stock Compensation topic of the ASC
requires that excess tax benefits be reported as a financing cash inflow rather than as a reduction
of taxes paid, which is included within operating cash flows. Monsantos income taxes currently
payable have been reduced by the tax benefits from employee stock option exercises. The excess tax
benefits were recorded as an increase to additional paid-in capital. The following table shows the
components of stock-based compensation in the Statements of Consolidated Operations and Statements
of Consolidated Cash Flows.

Year Ended Aug. 31,

(Dollars in millions)

2011

2010

2009

Cost of Goods Sold

$

(18

)

$

(16

)

$

(21

)

Selling, General and Administrative Expenses

(68

)

(61

)

(72

)

Research and Development Expenses

(27

)

(24

)

(23

)

Restructuring Charges

8

(4

)

(15

)

Total Stock-Based Compensation Expense Included in Operating Expenses

(105

)

(105

)

(131

)

Loss from Continuing Operations Before Income Taxes

(105

)

(105

)

(131

)

Income Tax Benefit

36

36

45

Net Loss

$

(69

)

$

(69

)

$

(86

)

Basic Loss per Share

$

(0.13

)

$

(0.13

)

$

(0.16

)

Diluted Loss per Share

$

(0.13

)

$

(0.13

)

$

(0.15

)

Net Cash Required by Operating Activities

$

(36

)

$

(43

)

$

(35

)

Net Cash Provided by Financing Activities

$

36

$

43

$

35

Plan Descriptions: Share-based awards are designed to reward employees for their long-term
contributions to the company and to provide incentives for them to remain with the company.
Monsanto issues stock option awards, time-based restricted stock, restricted stock units and
restricted stock units with performance conditions under three stock plans. Under the Monsanto
Company Long-Term Incentive Plan, as amended (LTIP), the company may grant awards to key officers,
directors and employees of Monsanto, including stock options, of up to 78.5 million shares of
Monsanto common stock. Other employees may be granted options under the Monsanto Company
Broad-Based Stock Option Plan (Broad-Based Plan), which permits the granting of a maximum of 5.4
million shares of Monsanto common stock to employees other than officers and other employees
subject to special reporting requirements. In January 2005, shareowners approved the Monsanto
Company 2005 Long-Term Incentive Plan (2005 LTIP), under which the company may grant awards to key
officers, directors and employees of Monsanto, including stock options, of up to 24.0 million
shares of Monsanto common stock. Under the LTIP and the 2005 LTIP, the option exercise price equals
the fair value of the common stock on the date of grant.

The plans provide that the term of any option granted may not exceed 10 years and that each option
may be exercised for such period as may be specified in the terms and conditions of the grant, as
approved by the People and Compensation Committee of the board of directors. Generally, the options
vest over three years, with one-third of the total award vesting each year. Grants of restricted
stock or restricted stock units generally vest at the end of a three- to five-year service period
as specified in the terms and conditions of the grant, as approved by the Chairperson of the People
and Compensation Committee of the board of directors. Restricted stock and restricted stock units
represent the right to receive a number of shares of stock dependent upon vesting requirements.
Vesting is subject to the terms and conditions of the grant, which generally require the employees
continued employment during the designated service period and may also be subject to Monsantos
attainment of specified performance criteria during the designated performance period. Shares
related to restricted stock and restricted stock units are released to employees upon satisfaction
of all vesting requirements. During fiscal years 2011, 2010 and 2009, Monsanto issued 33,030,
41,980, and 200,060 restricted stock units, respectively, to certain

Monsanto employees under a one-time, broad-based program, as approved by the People and
Compensation Committee of the board of directors. Compensation expense for stock options,
restricted stock and restricted stock units is measured at fair value on the date of grant, net of
estimated forfeitures, and recognized over the vesting period of the award.

Certain Monsanto employees outside the United States may receive stock appreciation rights or cash
settled restricted stock units as part of Monsantos stock compensation plans. In addition, certain
employees on international assignment may receive phantom stock awards that are based on the value
of the companys stock, but paid in cash upon the occurrence of certain events. Stock appreciation
rights entitle employees to receive a cash amount determined by the appreciation in the fair value
of the companys common stock between the grant date of the award and the date of exercise. Cash
settled restricted stock units and phantom stock awards entitle employees to receive a cash amount
determined by the fair value of the companys common stock on the vesting date. As of Aug. 31,
2011, the fair value of stock appreciation rights, restricted stock units and phantom stock
accounted for as liability awards was less than $1 million, less than $1 million and $1 million,
respectively. The fair value is remeasured at the end of each reporting period until exercised, and
compensation expense is recognized over the requisite service period in accordance with
Compensation  Stock Compensation topic of the ASC. Share-based liabilities paid related to stock
appreciation rights were less than $1 million in each of the fiscal years 2011, 2010 and 2009.
Additionally, less than $1 million, $1 million, and $1 million was paid related to phantom stock in
each of the fiscal years 2011, 2010 and 2009, respectively.

Monsanto also issues share-based awards under the Monsanto Non-Employee Director Equity Incentive
Compensation Plan (Director Plan) for directors who are not employees of Monsanto or its
affiliates. Under the Director Plan, half of the annual retainer for each nonemployee director is
paid in the form of deferred stock  shares of common stock to be delivered at a specified future
time. The remainder is payable, at the election of each director, in the form of restricted stock,
deferred stock, current cash and/or deferred cash. The Director Plan also provides that a
nonemployee director will receive a one-time restricted stock grant upon becoming a member of
Monsantos board of directors which is equivalent to the annual retainer divided by the closing
stock price on the service commencement date. The restricted stock grant will vest on the third
anniversary of the grant date. Awards of deferred stock and restricted stock under the Director
Plan are granted under the LTIP as provided for in the Director Plan. The grant date fair value of
awards outstanding under the Director Plan was $11 million as of Aug. 31, 2011. Compensation
expense for most awards under the Director Plan is measured at fair value at the date of grant and
recognized over the vesting period of the award. There was $4 million of share-based liabilities
paid under the Director Plan in 2011. There were no share-based liabilities paid under the Director
Plan in 2010 or 2009. Additionally, 217,063 shares of directors deferred stock related to grants
and dividend equivalents received in prior years were vested and outstanding at Aug. 31, 2011.

A summary of the status of Monsantos stock options for the periods from Sept. 1, 2008, through
Aug. 31, 2011, follows:

Monsanto stock options outstanding as of Aug. 31, 2011, are summarized as follows:

(Dollars in
millions, except

per share amounts)

Options Outstanding

Options Exercisable

Weighted-Average

Weighted-Average

Remaining

Aggregate

Remaining

Aggregate

Range of

Contractual Life

Weighted-Average

Intrinsic

Contractual Life

Weighted-Average

Intrinsic

Exercise Price

Options

(Years)

Exercise Price

Value(1)

Options

(Years)

Exercise Price

Value(1)

$7.33 - $10.00

1,340,527

1.57

$

8.16

$

81

1,340,527

1.57

$

8.16

$

81

$10.01-$20.00

1,324,315

1.98

$

16.26

$

70

1,324,315

1.98

$

16.26

$

70

$20.01-$30.00

4,710,880

3.65

$

25.75

$

203

4,710,880

3.65

$

25.75

$

203

$30.01-$80.00

9,583,732

7.55

$

58.08

$

110

3,999,960

5.87

$

51.51

$

72

$80.01-$141.50

4,549,581

6.62

$

88.67

$



3,871,161

6.53

$

88.58

$



21,509,035

5.79

$

51.78

$

464

15,246,843

4.64

$

46.09

$

426

(1)

The aggregate intrinsic value represents the total pretax intrinsic value, based on
Monsantos closing stock price of $68.93 as of Aug. 31, 2011, which would have been received
by the option holders had all option holders exercised their options as of that date.

At Aug. 31, 2011, 20,911,950 nonqualified stock options were vested or expected to vest. The
weighted-average remaining contractual life of these stock options was 5.71 years and the
weighted-average exercise price was $51.39 per share. The aggregate intrinsic value of these stock
options was $461 million at Aug. 31, 2011.

The weighted-average grant-date fair value of nonqualified stock options granted during fiscal
2011, 2010 and 2009 was $19.62, $24.03 and $37.39, respectively, per share. The total pretax
intrinsic value of options exercised during the fiscal years ended 2011, 2010 and 2009 was $123
million, $137 million and $112 million, respectively. Pretax unrecognized compensation expense for
stock options, net of estimated forfeitures, was $68 million as of Aug. 31, 2011, and will be
recognized as expense over a weighted-average remaining vesting period of 1.7 years.

A summary of the status of Monsantos restricted stock, restricted stock units and directors
deferred stock compensation plans for fiscal year 2011 follows:

Weighted-Average

Restricted

Weighted-Average

Directors'

Weighted-Average

Restricted

Grant Date

Stock

Grant Date

Deferred

Grant Date

Stock

Fair Values

Units

Fair Values

Stock

Fair Value

Nonvested as of Aug. 31, 2010

41,970

$

42.04

1,386,771

$

106.76





Granted

12,167

$

60.86

556,774

$

61.96

24,534

$

54.75

Vested

(28,292

)

$

38.60

(205,907

)

$

98.83

(21,848

)

$

54.84

Forfeitures

(1,264

)

$

53.99

(113,914

)

$

85.50

(2,686

)

$

53.99

Nonvested as of Aug. 31, 2011

24,581

$

54.71

1,623,724

$

93.99





The weighted-average grant-date fair value of restricted stock granted during fiscal years
2011, 2010 and 2009 was $60.86, $81.94 and $81.55, respectively, per share. The weighted-average
grant-date fair value of restricted stock units granted during fiscal years 2011, 2010 and 2009 was
$61.96, $69.57 and $82.01, respectively, per share. The weighted-average grant-date fair value of
directors deferred stock granted during fiscal years 2011, 2010 and 2009 was $54.75, $81.94 and
$113.13, respectively, per share. The total fair value of restricted stock that vested during
fiscal years 2011, 2010 and 2009 was $1 million, $1 million and $2 million, respectively. The total
fair value of restricted stock units that vested during fiscal years 2011, 2010 and 2009 was $20
million, $26 million and $10 million, respectively. The total fair value of directors deferred
stock vested during fiscal years 2011, 2010 and 2009 was $1 million per year.

Pretax unrecognized compensation expense, net of estimated forfeitures, for nonvested restricted
stock and restricted stock units was less than $1 million and $52 million, respectively, as of Aug.
31, 2011, which will be recognized as expense over the weighted-average remaining requisite service
periods. At Aug. 31, 2011, there was no unrecognized compensation

expense related to directors deferred stock. The weighted-average remaining requisite service
periods for nonvested restricted stock and restricted stock units were 2.3 years and 2.0 years,
respectively, as of Aug. 31, 2011.

Valuation and Expense Information under Compensation  Stock Compensation topic of the ASC:
Monsanto estimates the value of employee stock options on the date of grant using a
lattice-binomial model. A lattice-binomial model requires the use of extensive actual employee
exercise behavior data and a number of complex assumptions including volatility, risk-free interest
rate and expected dividends. Expected volatilities used in the model are based on implied
volatilities from traded options on Monsantos stock and historical volatility of Monsantos stock
price. The expected life represents the weighted-average period the stock options are expected to
remain outstanding and is a derived output of the model. The lattice-binomial model incorporates
exercise and post-vesting forfeiture assumptions based on an analysis of historical data. The
following assumptions were used to calculate the estimated value of employee stock options:

Lattice-binomial

Assumptions

2011

2010

2009

Expected Dividend Yield

1.7

%

1.3

%

0.9

%

Expected Volatility

31%-43

%

28%-43

%

37%-69

%

Weighted-Average Volatility

41.8

%

40.0

%

45.5

%

Risk-Free Interest Rates

1.82%-3.04

%

2.35%-3.16

%

1.72%-3.39

%

Weighted-Average Risk-Free Interest Rate

1.85

%

3.03

%

3.35

%

Expected Option Life (in years)

6.5

6.3

6.4

Monsanto estimates the value of restricted stock units using the fair value on the date of
grant. When dividends are not paid on outstanding restricted stock units, the award is valued by
reducing the grant-date price by the present value of the dividends expected to be paid, discounted
at the appropriate risk-free interest rate. The fair value of restricted stock units granted is
calculated using the same expected dividend yield and weighted-average risk-free interest rate
assumptions as those used for stock options.

NOTE 22. CAPITAL STOCK

Monsanto is authorized to issue 1.5 billion shares of common stock, $0.01 par value, and 20 million
shares of undesignated preferred stock, $0.01 par value. The board of directors has the authority,
without action by the shareowners, to designate and issue preferred stock in one or more series and
to designate the rights, preferences and privileges of each series, which may be greater than the
rights of the companys common stock. It is not possible to state the actual effect of the issuance
of any shares of preferred stock upon the rights of holders of common stock until the board of
directors determines the specific rights of the holders of preferred stock.

The authorization of undesignated preferred stock makes it possible for Monsantos board of
directors to issue preferred stock with voting or other rights or preferences that could impede the
success of any attempt to change control of the company. These and other provisions may deter
hostile takeovers or delay attempts to change management control.

There were no shares of preferred stock outstanding as of Aug. 31, 2011, or Aug. 31, 2010. As of
Aug. 31, 2011, and Aug. 31, 2010, 535.3 million and 540.4 million shares of common stock were
outstanding, respectively. In addition, 108 million shares of common stock were approved for
employee and director stock options, of which 9 million and 12 million were remaining in reserve at
Aug. 31, 2011, and Aug. 31, 2010, respectively.

In October 2005, the board of directors authorized the purchase of up to $800 million of the
companys common stock over a four year period. In 2009 and 2008, the company purchased $129
million and $361 million, respectively, of common stock under the $800 million authorization. A
total of 11.2 million shares have been repurchased under this program, and it was completed on Dec.
23, 2008.

In April 2008, the board of directors authorized a repurchase program of up to $800 million of the
companys common stock over a three year period. In 2010 and 2009, the company purchased $531
million and $269 million, respectively, of common stock under the $800 million authorization. A
total of 11.3 million shares have been repurchased under this program, and it was completed on Aug.
24, 2010.

In June 2010, the board of directors authorized a new repurchase program of up to an additional $1
billion of the companys common stock over a three year period beginning July 1, 2010. This
repurchase program commenced on Aug. 24, 2010, and will expire on Aug. 24, 2013. Through Aug. 31,
2011, and Aug. 31, 2010, 8.1 million and less than one million shares have been repurchased for
$502 million and $1 million, respectively, under the June 2010 program.

Information regarding accumulated other comprehensive loss is as follows:

Year Ended Aug. 31,

(Dollars in millions)

2011

2010

2009

Accumulated Foreign Currency Translation Adjustments

$

270

$

(240

)

$

(141

)

Net Unrealized Loss on Investments, Net of Tax





(6

)

Net Accumulated Derivative Income (Loss), Net of Tax

63

(48

)

(101

)

Postretirement Benefit Plan Activity, Net of Tax

(449

)

(609

)

(496

)

Accumulated Other Comprehensive Loss

$

(116

)

$

(897

)

$

(744

)

NOTE 24. EARNINGS PER SHARE

Basic earnings per share (EPS) was computed using the weighted-average number of common shares
outstanding during the periods shown in the table below. The diluted EPS computation takes into
account the effect of dilutive potential common shares, as shown in the table below. Potential
common shares consist of stock options, restricted stock, restricted stock units and directors
deferred shares calculated using the treasury stock method and are excluded if their effect is
antidilutive. These dilutive potential common shares consisted of 5.9 million, 7.1 million and 8.5
million, in fiscal years 2011, 2010 and 2009, respectively. Approximately 11 million, 8 million and
5 million stock options were excluded from the computations of dilutive potential common shares for
the years ended Aug. 31, 2011, 2010 and 2009, respectively, as their effect is antidilutive. Of
those antidilutive options, approximately 8 million, 8 million and 5 million stock options were
excluded from the computations of dilutive potential common shares for the fiscal years ended Aug.
31, 2011, 2010 and 2009, respectively, as their exercise prices were greater than the average
market price of common shares for the period.

Effective Sept. 1, 2009, the company retrospectively adopted a FASB-issued standard that requires
unvested share-based payment awards that contain rights to receive non-forfeitable dividends or
dividend equivalents to be included in the two-class method of computing earnings per share as
described in the Earnings Per Share topic of the ASC. The adoption of this standard increased the
weighted average number of basic and diluted shares by 0.6 million and 0.4 million, respectively,
for the fiscal year ended Aug. 31, 2009.

Cash payments for interest and taxes during fiscal years 2011, 2010 and 2009, were as follows:

Year Ended Aug. 31,

(Dollars in millions)

2011

2010

2009

Interest

$

151

$

156

$

136

Taxes

385

497

657

During fiscal years 2011, 2010 and 2009, the company recorded the following noncash investing
and financing transactions:



In fourth quarter 2011, 2010 and 2009, the board of directors declared a dividend
payable in first quarter 2012, 2011 and 2010, respectively. As of Aug. 31, 2011, 2010 and
2009, a dividend payable of $161 million, $151 million and $145 million, respectively, was
recorded.



During fiscal years 2011, 2010 and 2009, the company recognized noncash transactions
related to restricted stock units and acquisitions. See Note 21  Stock-Based Compensation
Plans  for further discussion of restricted stock units and Note 4  Business
Combinations  for details of adjustments to goodwill.



During fiscal year 2011, the company recognized noncash transactions related to a
paid-up license agreement for weed control and herbicide combination use. An intangible
asset of $81 million was recorded on the Statement of Consolidated Financial Position. The
pending payment of $40 million will be made in December 2011.



In third quarter 2010, Monsanto acquired the Chesterfield Village Research Center from
Pfizer for $435 million. The seller financed $324 million of this purchase. As of Aug. 31,
2011, $136 million is included in short-term debt on the Statements of Consolidated
Financial Position. See Note 15  Debt and Other Credit Arrangements  for further
details.



During fiscal year 2010, the company recognized noncash transactions related to
restructuring. See Note 5  Restructuring.



During fiscal year 2010, the company recognized noncash transactions related to a
paid-up license agreement for Glyphosate manufacturing technology. Intangibles of $39
million were recorded on the Statement of Consolidated Financial Position. See Note 11 
Goodwill and Other Intangible Assets  for further details.



In 2009, intangible assets of $4 million, long-term investments of $2 million, and
liabilities of $6 million were recorded as a result of payment provisions under
collaboration and license agreements. See Note 12  Investments and Equity Affiliates 
for further discussion of the investments.



In 2009, the company recognized noncash transactions related to a new capital lease.
Long-term debt, short-term debt and assets of $18 million, $2 million and $20 million,
respectively, were recorded as a result of payment provisions under the lease agreement.

For variable rate debt, interest is calculated using the applicable rates as of Aug.
31, 2011.

(2)

Includes the companys planned pension and other postretirement benefit
contributions for 2012. The actual amounts funded in 2012 may differ from the amounts listed
above. Contributions in 2013 through 2017 are excluded as those amounts are unknown. Refer to
Note 18  Postretirement Benefits  Pensions  and Note 19  Postretirement Benefits 
Health Care and Other Postemployment Benefits  for more information. The 2017 and beyond
amount relates to the ESOP enhancement liability balance. Refer to Note 20  Employee Savings
Plans  for more information.

(3)

Unrecognized tax benefits relate to uncertain tax positions recorded under the
Income Taxes topic of the ASC. The company is unable to reasonably predict the timing of tax
settlements, as tax audits can involve complex issues and the resolution of those issues may
span multiple years, particularly if subject to negotiation or litigation. See Note 14 
Income Taxes  for more information.

Leases: The company routinely leases buildings for use as administrative offices or
warehousing, land for research facilities, company aircraft, railcars, motor vehicles and
equipment. Assets held under capital leases are included in property, plant and equipment. Certain
operating leases contain renewal options that may be exercised at Monsantos discretion. The
expected lease term is considered in the decision about whether a lease should be recorded as
capital or operating.

Certain operating leases contain escalation provisions for an annual inflation adjustment factor
and some are based on the CPI published by the Bureau of Labor Statistics. Additionally, certain
leases require Monsanto to pay for property taxes, insurance, maintenance, and other operating
expenses called rent adjustments, which are subject to change over the life of the lease. These
adjustments were not determinable at the time the lease agreements were executed. Therefore,
Monsanto recognizes the expenses for rent and rent adjustments when they become known and payable,
which is more representative of the time pattern in which the company derives the related benefit
in accordance with the Leases topic of the ASC.

Other lease agreements provide for base rent adjustments contingent upon future changes in
Monsantos use of the leased space. At the inception of these leases, Monsanto does not have the
right to control more than the percentage defined in the lease agreement of the leased property.
Therefore, as the companys use of the leased space increases, the company recognizes rent expense
for the additional leased property during the period during which the company has the right to
control the use of additional property in accordance with the Leases topic of the ASC.

Rent expense was $222 million for fiscal year 2011, $193 million for fiscal year 2010 and $205
million for fiscal year 2009.

Guarantees: Monsanto may provide and has provided guarantees on behalf of its consolidated
subsidiaries for obligations incurred in the normal course of business. Because these are
guarantees of obligations of consolidated subsidiaries, Monsantos consolidated financial position
is not affected by the issuance of these guarantees.

Monsanto warrants the performance of certain products through standard product warranties. In
addition, Monsanto provides extensive marketing programs to increase sales and enhance customer
satisfaction. These programs may include performance
warranty features and indemnification for risks not related to performance, both of which are
provided to qualifying customers on a contractual basis. The cost of payments for claims based on
performance warranties has been, and is expected to continue to be, insignificant. It is not
possible to predict the maximum potential amount of future payments for indemnification for losses
not related to the performance of our products (for example, replanting due to extreme weather
conditions), because it is not possible to predict whether the specified contingencies will occur
and if so, to what extent.

In various circumstances, Monsanto has agreed to indemnify or reimburse other parties for various
losses or expenses. For example, like many other companies, Monsanto has agreed to indemnify its
officers and directors for liabilities incurred by reason of their position with Monsanto.
Contracts for the sale or purchase of a business or line of business may require indemnification
for various events, including certain events that arose before the sale, or tax liabilities that
arise before, after or in connection with the sale. Certain seed licensee arrangements indemnify
the licensee against liability and damages, including legal defense costs, arising from any claims
of patent, copyright, trademark, or trade secret infringement related to Monsantos trait
technology. Germplasm licenses generally indemnify the licensee against claims related to the
source or ownership of the licensed germplasm. Litigation settlement agreements may contain
indemnification provisions covering future issues associated with the settled matter. Credit
agreements and other financial agreements frequently require reimbursement for certain
unanticipated costs resulting from changes in legal or regulatory requirements or guidelines. These
agreements may also require reimbursement of withheld taxes, and additional payments that provide
recipients amounts equal to the sums they would have received had no such withholding been made.
Indemnities like those in this paragraph may be found in many types of agreements, including, for
example, operating agreements, leases, purchase or sale agreements and other licenses. Leases may
require indemnification for liabilities Monsantos operations may potentially create for the lessor
or lessee. It is not possible to predict the maximum future payments possible under these or
similar provisions because it is not possible to predict whether any of these contingencies will
come to pass and if so, to what extent. Historically, these types of provisions did not have a
material effect on Monsantos financial position, profitability or liquidity. Monsanto believes
that if it were to incur a loss in any of these matters, it would not have a material effect on its
financial position, profitability or liquidity. Based on the companys current assessment of
exposure, Monsanto has recorded a liability of $3 million as of fiscal years 2011 and 2010, related
to these indemnifications.

Environmental and Litigation Liabilities: Monsanto is involved in environmental remediation
and legal proceedings related to its current business and also, pursuant to indemnification
obligations, related to Pharmacias former chemical and agricultural businesses. In addition,
Monsanto has liabilities established for various product claims. With respect to certain of these

proceedings, Monsanto has established a reserve for the estimated liabilities. For more information
on Monsantos policies regarding Litigation and Other Contingencies, see Note 2  Significant
Accounting Policies. Portions of the liability included in a reserve for which the amount and
timing of cash payments are fixed or readily determinable were discounted, using a risk-free
discount rate adjusted for inflation ranging from 2.6 to 3.5 percent. The remaining portions of the
liability were not subject to discounting because of uncertainties in the timing of cash outlay.
The following table provides a detailed summary of the discounted and undiscounted amounts included
in the reserve for environmental and litigation liabilities:

(Dollars in millions)

Aggregate Undiscounted Amount

$

135

Discounted Portion:

Expected payment (undiscounted) for:

2012

22

2013

14

2014

11

2015

16

2016

11

Undiscounted aggregate expected payments after 2016

160

Aggregate Amount to be Discounted as of Aug. 31, 2011

234

Discount, as of Aug. 31, 2011

(104

)

Aggregate Discounted Amount Accrued as of Aug. 31, 2011

$

130

Total Environmental and Litigation Reserve as of Aug. 31, 2011

$

265

Changes in the environmental and litigation liabilities for fiscal years 2009, 2010, and 2011
are as follows:

Balance at Sept. 1, 2008

$

272

Payments

(85

)

Accretion

8

Additional liabilities recognized in fiscal year 2009

56

Foreign currency translation and other

11

Balance at Aug. 31, 2009

$

262

Payments

(57

)

Accretion

5

Additional liabilities recognized in fiscal year 2010

45

Balance at Aug. 31, 2010

$

255

Payments

(53

)

Accretion

11

Additional liabilities recognized in fiscal year 2011

52

Total Environmental and Litigation Reserve as of Aug. 31, 2011

$

265

Environmental: Included in the liability are amounts related to environmental remediation of
sites associated with Pharmacias former chemicals and agricultural businesses, with no single site
representing the majority of the environmental liability. These sites are in various stages of
environmental management: at some sites, work is in the early stages of assessment and
investigation, while at others the cleanup remedies have been implemented and the remaining work
consists of monitoring the integrity of that remedy. The extent of Monsantos involvement at the
various sites ranges from less than 1 percent to 100 percent of the costs currently anticipated. At
some sites, Monsanto is acting under court or agency order, while at others it is acting with very
minimal government involvement.

Monsanto does not currently anticipate any material loss in excess of the amount recorded for the
environmental sites reflected in the liability. However, it is possible that new information about
these sites for which the accrual has been established, such as results of investigations by
regulatory agencies, Monsanto, or other parties, could require Monsanto to
reassess its potential exposure related to environmental matters. Monsantos future remediation
expenses at these sites may be affected by a number of uncertainties. These uncertainties include,
but are not limited to, the method and extent of remediation, the percentage of material
attributable to Monsanto at the sites relative to that attributable to other parties, and

the financial capabilities of the other potentially responsible parties. Monsanto cannot reasonably
estimate any additional loss and does not expect the resolution of such uncertainties, or
environmental matters not reflected in the liability, to have a material adverse effect on its
consolidated results of operations, financial position, cash flows or liquidity.

Litigation: The above liability includes amounts related to certain third-party litigation with
respect to Monsantos business, as well as tort litigation related to Pharmacias former chemical
business, including lawsuits involving polychlorinated biphenyls (PCBs), dioxins, and other
chemical and premises liability litigation. Following is a description of one of the more
significant litigation matters reflected in the liability.



On Dec. 17, 2004, 15 plaintiffs filed a purported class action lawsuit, styled Virdie
Allen, et al. v. Monsanto, et al., in the Putnam County, West Virginia, state court against
Monsanto, Pharmacia and seven other defendants. Monsanto is named as the successor in
interest to the liabilities of Pharmacia. The alleged class consists of all current and
former residents, workers, and students who, between 1949 and the present, were allegedly
exposed to dioxins/furans contamination in counties surrounding Nitro, West Virginia. The
complaint alleges that the source of the contamination is a chemical plant in Nitro,
formerly owned and operated by Pharmacia and later by Flexsys, a joint venture between
Solutia and Akzo Nobel Chemicals, Inc. (Akzo Nobel). Akzo Nobel and Flexsys were named
defendants in the case but Solutia was not, due to its then pending bankruptcy proceeding.
The suit seeks damages for property cleanup costs, loss of real estate value, funds to test
property for contamination levels, funds to test for human exposure, and future medical
monitoring costs. The complaint also seeks an injunction against further contamination and
punitive damages. Monsanto has agreed to indemnify and defend Akzo Nobel and the Flexsys
defendant group, but on May 27, 2011, the judge dismissed both Akzo Nobel and Flexsys from
the case. The class action certification hearing was held on Oct. 29, 2007. On Jan. 8,
2008, the trial court issued an order certifying the Allen (now Zina G. Bibb et al. v.
Monsanto et al., because Bibb replaced Allen as class representative) case as a class
action for property damage and for medical monitoring. On Nov. 2, 2011, the court, in
response to defense motions, entered an order decertifying the property class. The court
has set a trial date of Jan. 3, 2012, for the Bibb medical monitoring class action.

In October 2007 and November 2009, a total of approximately 200 separate, single plaintiff
civil actions were filed in Putnam County, West Virginia, against Monsanto, Pharmacia, Akzo
Nobel (and several of its affiliates), Flexsys America Co. (and several of its affiliates),
Solutia, and Apogee Coal Company, LLC. These cases allege personal injury occasioned by
exposure to dioxin generated by the Nitro Plant during production of 2,4,5 T (1949-1969) and
thereafter. Monsanto has agreed to accept the tenders of defense in the matters by
Pharmacia, Solutia, Akzo Nobel, Flexsys America, and Apogee Coal under a reservation of
rights.

Including litigation reflected in the liability, Monsanto is involved in various legal proceedings
that arise in the ordinary course of its business or pursuant to Monsantos indemnification
obligations to Pharmacia, as well as proceedings that management has considered to be material
under SEC regulations. Some of the lawsuits seek damages in very large amounts, or seek to restrict
the companys business activities. Monsanto believes that it has meritorious legal positions and
will continue to represent its interests vigorously in all of the proceedings that it is defending
or prosecuting. Although the ultimate liabilities resulting from such proceedings, or the
proceedings reflected in the above liability, may be significant to profitability in the period
recognized, management does not anticipate they will have a material adverse effect on Monsantos
consolidated results of operations, financial position, cash flows or liquidity. Specific
information with respect to these proceedings appears below and in Part I  Item 3  Legal
Proceedings of Monsantos Report on Form 10-K.



On June 23, 2004, two former employees of Monsanto and Pharmacia filed a purported class
action lawsuit in the U.S. District Court for the Southern District of Illinois against
Monsanto and the Monsanto Company Pension Plan, which is referred to as the Pension Plan.
The suit claims that the Pension Plan has violated the age discrimination and other rules
under the Employee Retirement Income Security Act of 1974 from Jan. 1, 1997 (when the Pension
Plan was sponsored by Pharmacia, then known as Monsanto Company) and continuing to the
present. In January 2006, a separate group of former employees of Pharmacia filed a similar
purported class action lawsuit in the U.S. District Court for the Southern District of
Illinois against Pharmacia, the Pharmacia Cash Balance Plan, and other defendants. On July 7,
2006, the plaintiffs amended their lawsuit to add Monsanto and the Pension Plan as additional
defendants. On Sept. 1, 2006,
the Court consolidated these lawsuits with two purported class action lawsuits also pending in
the same Court against the Solutia Company Pension Plan, under Walker v. Monsanto, the first
filed case. The court conducted a class certification hearing on Sept. 12, 2007. Prior to the
hearing, all parties agreed the case should proceed as a class action and also

agreed on a
definition of the respective classes. The classes were certified by court order on May 22, 2008.
On July 11, 2008, all parties filed dispositive motions on the issue of liability, which motions
were heard by the court on May 6, 2009. On June 11, 2009, the Court granted summary judgment in
favor of Monsanto and the other defendants on the age discrimination claims. The Court granted
summary judgment in favor of the plaintiffs on a separate claim regarding post-termination
interest, which was subsequently settled for an immaterial amount. The Court entered judgment on
the entire case on Sept. 29, 2009. On Oct. 27, 2009, the plaintiffs filed a notice of appeal of
the summary judgment order on the age discrimination claims. The Seventh Circuit Court of
Appeals heard oral argument in the case on April 20, 2010, and on July 30, 2010, the Court
issued its decision affirming the decision of the District Court in all respects. The
plaintiffs subsequent petition for rehearing and petition for rehearing en banc was denied in
an order of the Court of Appeals issued on Sept. 14, 2010. On Dec. 13, 2010, the plaintiffs
filed a petition for a writ of certiorari with the United States Supreme Court, which was denied
by the Court on March 21, 2011.

NOTE 27. SEGMENT AND GEOGRAPHIC DATA

Monsanto conducts its worldwide operations through global businesses, which are aggregated into
reportable segments based on similarity of products, production processes, customers, distribution
methods and economic characteristics. The operating segments are aggregated into two reportable
segments: Seeds and Genomics and Agricultural Productivity. The Seeds and Genomics segment consists
of the global seeds and related traits businesses and biotechnology platforms. Within the Seeds and
Genomics segment, Monsantos significant operating segments are corn seed and traits, soybean seed
and traits, cotton seed and traits, vegetable seeds and all other crops seeds and traits. The wheat
and sugarcane businesses acquired in fourth and second quarters of 2009, respectively, are included
in the all other crops seeds and traits operating segment. In February 2011, the company
reorganized certain operating segments within our Agricultural Productivity reportable segment as a
result of a change in the way the Chief Executive Officer, who is the chief operating decision
maker, evaluates the performance of operations, develops strategy and allocates capital resources.
The Roundup and other glyphosate-based herbicides operating segment and the other operating
segments within Agricultural Productivity were combined into one operating segment which is now
managed as one business representing our weed management platform and to support our Seeds and
Genomics business. The change in operating segments had no impact on the companys reportable
segments. The historical segment disclosures have been recast to be consistent with the current
presentation. The Dairy business, which was previously included in the Agricultural Productivity
segment, was divested in fiscal year 2009 and is included in discontinued operations. EBIT is
defined as earnings (loss) before interest and taxes and is an operating performance measure for
the two business segments. EBIT is useful to management in demonstrating the operational
profitability of the segments by excluding interest and taxes, which are generally accounted for
across the entire company on a consolidated basis. Sales between segments were not significant.
Certain SG&A expenses are allocated between segments based on activity. Based on the Agricultural
Productivity segments decreasing contribution to total Monsanto operations, the allocation
percentages were changed at the beginning of fiscal year 2010.

EBIT is defined as earnings (loss) before interest and taxes; see the following
table for reconciliation. Earnings (loss) is intended to mean net income attributable to
Monsanto Company as presented in the Statements of Consolidated Operations under generally
accepted accounting principles. EBIT is an operating performance measure for the two business
segments.

(3)

Agricultural Productivity EBIT includes income of $3 million, $4 million and
$18 million from discontinued operations for fiscal years 2011, 2010 and 2009, respectively.

(4)

Includes assets recorded in continuing operations and discontinued operations.

(5)

EBIT includes restructuring charges for fiscal years 2011, 2010 and 2009. See
Note 5  Restructuring  for additional information.

A reconciliation of EBIT to net income for each period follows:

Year Ended Aug. 31,

(Dollars in millions)

2011

2010

2009

EBIT(1)

$

2,387

$

1,568

$

2,958

Interest Expense  Net

88

106

58

Income Tax Provision(2)

692

366

808

Net Income Attributable to Monsanto Company

$

1,607

$

1,096

$

2,092

(1)

Includes the income from operations of discontinued businesses and pre-tax
noncontrolling interest.

(2)

Includes the income tax provision from continuing operations, the income tax benefit
on noncontrolling interest and the income tax (benefit) provision on discontinued operations.

Net sales and long-lived assets are attributed to the geographic areas of the relevant
Monsanto legal entities. For example, a sale from the United States to a customer in Brazil is
reported as a U.S. export sale.

Net Sales to Unaffiliated Customers

Long-Lived Assets

Year Ended Aug. 31,

As of Aug. 31,

(Dollars in millions)

2011

2010

2009

2011

2010

United States

$

6,372

$

5,993

$

6,395

$

6,869

$

6,817

Europe-Africa

1,515

1,272

1,763

1,326

1,157

Brazil

1,276

1,066

1,419

948

873

Asia-Pacific

841

692

568

348

322

Argentina

773

616

597

237

223

Canada

458

364

457

94

72

Mexico

362

312

332

96

86

Other

225

168

154

234

227

Total

$

11,822

$

10,483

$

11,685

$

10,152

$

9,777

NOTE 28. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Advertising Costs: Costs for producing and communicating advertising for the various brands and
products were charged to selling, general and administrative (SG&A) expenses as they were incurred.
Advertising costs were $100 million, $120 million and $59 million in 2011, 2010 and 2009,
respectively.

Agency Fee and Marketing Agreement: In 1998, Pharmacia entered into an agency and marketing
agreement with The Scotts Miracle-Gro Company (f/k/a The Scotts Company) (Scotts) with respect to
the lawn-and-garden herbicide business, which was transferred to Monsanto in connection with its
separation from Pharmacia. Scotts acts as Monsantos principal agent to market and distribute its
lawn-and-garden herbicide products. The agreement has an indefinite term, except in certain
countries in the European Union. The agreement related to those countries was automatically renewed
for two more years on September 30, 2011. Under the agreement, beginning in fourth quarter 1998,
Scotts was obligated to pay Monsanto a $20 million fixed fee each year (the annual payment) for the
length of the contract to defray costs associated with the lawn-and-garden herbicide business.
Monsanto records the annual payment from Scotts as a reduction of SG&A expenses ratably over the
year to which the payment relates.

Monsanto is obligated to pay Scotts an annual commission based on the earnings of the
lawn-and-garden herbicide business (before interest and income taxes). The amount of the commission
due to Scotts varies depending on whether or not the earnings of the lawn-and-garden herbicide
business exceed certain thresholds. The commission due to Scotts is accrued monthly and is included
in SG&A expenses. The commission expense included in SG&A expenses was $78 million in fiscal year
2011, $90 million in fiscal year 2010, and $71 million in fiscal year 2009 (the commission expense
presented herein is not netted with any payments received from Scotts).

NOTE 29. DISCONTINUED OPERATIONS

Dairy Business Divestiture: During fourth quarter 2008, the company determined that the Dairy
business was no longer consistent with its strategic business objectives, and thus entered into an
agreement to sell the majority of the Dairy business assets (excluding cash, trade receivables and
certain property) to Eli Lilly and Company for $300 million, plus additional contingent
consideration. The contingent consideration is a 10 year earn-out with potential annual payments
being earned by Monsanto if certain revenue levels are exceeded. On Oct. 1, 2008, Monsanto
consummated the sale to Eli Lilly after receiving approval from the appropriate regulatory
agencies. As a result, the Dairy business has been segregated from continuing operations and
presented as discontinued operations. The Dairy business was previously reported as a part of the
Agricultural Productivity segment.

During fiscal years 2011, 2010, and 2009 income from operations of discontinued businesses was
insignificant.

In November 2011, Monsanto filed an Amended Annual Report on Form 10-K/A (Amendment No. 1) (Form
10-K/A) to its Annual Report on Form 10-K for the fiscal year ended Aug. 31, 2010, to restate the
companys audited consolidated financial statements and related disclosures for the fiscal years
ended Aug. 31, 2010, and Aug. 31, 2009. The original Form 10-K was filed with the Securities and
Exchange Commission (SEC) on Oct. 27, 2010. In addition to the filing of the Form 10-K/A,
Monsanto filed amendments to the companys Quarterly Reports on Form 10-Q for each of the quarterly
periods ended Nov. 30, 2010, Feb. 28, 2011, and May 31, 2011, to restate the companys unaudited
condensed consolidated financial statements and related financial information for those quarterly
periods and the comparative fiscal year 2010 periods for the effects of the restatement. The
financial data for the fiscal year quarters in 2011 and 2010 herein incorporate the effects of this
restatement.

Monsanto records accrued customer incentive program costs as a reduction of revenue based on an
allocation of the incentive program cost to those revenue transactions that result in progress by
the customer toward earning the program incentive. For annual incentive programs, this generally
results in recording annual incentive program costs based on actual purchases made by customers
during the year as a percentage of estimated annual sales volume targets agreed upon with
customers.

In the third quarter of fiscal year 2011, Monsanto announced an investigation being conducted by
the SEC of the companys financial reporting associated with customer incentive programs for
glyphosate products for fiscal years 2010 and 2009. Following the SEC notification, Monsanto began
its own review and the Audit and Finance Committee of the Board of Directors retained independent
advisors to conduct an internal investigation. Through this review, the company identified
communications with customers and we identified other facts as described below that impacted our
determination of which revenue transactions resulted in progress by the customer toward earning the
program incentive.

Specifically, Monsanto implemented a program in the first quarter of fiscal year 2010 that was
structured to provide payments to retailers who met sales volume targets and performed other
marketing and sales activities in the fiscal year 2010 with the amount of the program incentive
determined based on the amount of inventory maintained by the customer at Aug. 31, 2009. The
company originally accrued the costs of this incentive program based on the retailers fiscal year
2010 purchases as a percentage of aggregated agreed upon fiscal year 2010 sales volume targets. As
a result of the companys internal review, Monsanto determined that, although the program was
implemented in first quarter of fiscal year 2010, Monsanto representatives communicated with
retailers about the program in the fourth quarter of fiscal year 2009, including advising customers
that purchasing product in the fourth quarter of 2009 was a qualification for participation in the
program in fiscal year 2010. These communications were intended to induce customers to purchase
branded glyphosate in the fourth quarter of fiscal year 2009. In light of these facts, Monsanto
determined that purchases made by these retail customers in the fourth quarter of fiscal year 2009
represented progress toward earning the program incentive. As such, it is appropriate to record a
portion of the related incentive cost as a reduction of revenue in that quarter as well as in
fiscal year 2010. As a result of the companys determination, approximately $24 million of customer
incentive accruals associated with the program originally recorded as a reduction of revenue in
fiscal year 2010 were recorded as a reduction of revenue in fiscal year 2009.

Additionally, Monsanto maintained an incentive program related to annual incentive agreements with
distributors regarding their sales of branded glyphosate. At the end of fiscal year 2009, Monsanto
determined not to make annual incentive payments under this program to seven of its distributors
who had failed to meet their agreed upon sales targets for branded glyphosate and reversed
incentive accruals previously recorded under this program for these customers. The company then
provided these distributors with an opportunity to earn back a substantial portion of these
incentives in fiscal year 2010 by achieving volume targets for branded glyphosate and performing
other marketing and sales activities in that fiscal year. Monsanto originally recorded the costs of
this program over these distributors fiscal year 2010 purchases as a percentage of aggregated
agreed upon fiscal year 2010 sales volume targets. As a result of its internal review, the company
determined that, although this program was formally announced in the first quarter of fiscal year
2010, Monsanto representatives communicated with distributors about the program in the fourth
quarter of fiscal year 2009, and that the incentive opportunity ultimately provided to each
distributor under this program in fiscal year 2010 was derived from each distributors total sales
of branded glyphosate in fiscal year 2009. In light of these facts, Monsanto determined that
purchases made by these customers in fiscal years 2009 and 2010 represented progress toward earning
the program incentive. As such, the company determined that the appropriate method of recording the
cost associated with this program is based upon each distributors
purchase volume over the period of fiscal years 2009 and 2010, with a cumulative catch-up entry in
the fourth quarter of fiscal year 2009. Accordingly, the company recorded an additional $20 million
of customer incentive program costs as a reduction of revenue in fiscal year 2009 originally
recorded as a reduction in revenue in fiscal year 2010. In

addition, Monsantos internal review
revealed that, during the second quarter of fiscal year 2010, one of the seven distributors
received written confirmation from Monsanto that it had fulfilled the requirements of this program.
Accordingly, the company determined that it was appropriate to record the full amount of this
distributors unearned incentive in the second quarter of 2010. As a result of the companys
determination, approximately $10 million of accruals associated with this one distributors
incentive under this program originally recorded as a reduction of revenue in third quarter fiscal
year 2010 were recorded as a reduction of revenue in second quarter fiscal year 2010.

A similar earn back program was offered to two distributors in fiscal year 2011. At the end of
fiscal year 2010, Monsanto reversed customer incentive accruals for two distributors that failed to
earn their fiscal year 2010 annual incentive payments because they did not meet their agreed upon
sales targets. The company then provided these distributors with an opportunity to earn back a
substantial portion of this incentive in fiscal year 2011 by achieving agreed upon sales volume
targets for branded glyphosate and performing other marketing and sales activities in fiscal year
2011. The company originally accrued the costs of this incentive program over these distributors
fiscal year 2011 purchases as a percentage of aggregated agreed upon fiscal year 2011 sales volume
targets. As a result of its internal review, Monsanto determined that purchases made by the
customers in fiscal year 2010 represented progress toward earning the program incentive, and that
it was appropriate to record the entire cost associated with this incentive program in fiscal year
2010 in view of several factors that made it more apparent that the two distributor customers had
earned these incentives in fiscal year 2010. Such factors included the change in market dynamics
following the companys May 2010 restructuring of its glyphosate business, the fact that both
distributors received written confirmation from Monsanto in the second quarter of fiscal 2011 that
they had fulfilled the requirements of this program prior to achieving sales volume targets and,
with respect to the prepayment of program incentives to these customers in the first and second
quarter of fiscal year 2011, the unlikelihood that Monsanto would have enforced its contractual
right of offset against these distributors with respect to any unearned portion of their
incentives. As a result of the companys determination, approximately $48 million of customer
incentive accruals associated with this program originally recorded as a reduction in revenue in
fiscal year 2011 were recorded as a reduction in revenue in fiscal year 2010.

As a result of the findings of the companys investigation and the revised accounting described
above, Monsanto announced a restatement of the consolidated financial statements for the fiscal
years ended Aug. 31, 2010, and 2009.

The effects of the adjustments relating to certain customer incentive programs to the companys
previously issued audited consolidated financial statements for fiscal years 2010 and 2009 include
decreases in net sales by $4 million and $45 million, decreases in income tax expense by $1 million
and $17 million, decreases in net income by $3 million and $28 million, increases in deferred tax
assets by $18 million and $18 million, and increases in accrued marketing programs by $48 million
and $45 million, respectively. There was also a reclassification adjustment made for the fiscal
year ended Aug. 31, 2010, between net sales and SG&A, which resulted in a decrease of $15 million
in both line items.

Other Adjustments

In addition to the adjustments relating to certain customer incentive programs described above,
Monsanto has made other adjustments that had been previously identified but not corrected because
they were not material, individually or in the aggregate, to the companys consolidated financial
statements. The adjustments included certain reclassifications between net sales and SG&A,
inventory and grower production accruals, inventory and other non-current assets, miscellaneous
receivables and income taxes payable and accrued marketing programs and miscellaneous accruals. The
accrued marketing programs adjustment is unrelated to the adjustments described above surrounding
customer incentive programs. Adjustments were also made to record certain discrete income tax items
and equity affiliate activity in the proper periods.

The following tables include the impact of the restatement on Monsantos previously issued audited
Statements of Consolidated Operations for the year ended Aug. 31, 2010.

The following table includes financial data for the fiscal year quarters in 2011 and 2010 which
have been adjusted for discontinued operations. See Note 29  Discontinued Operations  for
further discussion of the divested Dairy business.

(Dollars in millions, except per share amounts)

1st

2nd

3rd

4th

2011

Quarter

Quarter

Quarter

Quarter

Total

Net Sales

$

1,836

$

4,131

$

3,608

$

2,247

$

11,822

Gross Profit

824

2,310

1,973

972

6,079

Income
(Loss) from Continuing Operations Attributable to Monsanto Company